Patience Wanes Over West Coast Port-Labor Talks As Cargo Drops

By Laura Curtis and Augusta Saraiva

Feb 10, 2023 (Bloomberg) –Talks for a new labor pact between West Coast dockworkers and their employers are stretching into a 10th month, but with no agreement in sight and volumes dropping, patience is wearing thin.

The pandemic-era pickup in cargo movement has largely eased, partly due to businesses shifting goods to East and Gulf coast ports to avoid a repeat of Covid-era supply-chain logjams and seeking to avert the risk of delays that marred labor negotiations in 2014 and 2015. 

The volume slowdown is lowering urgency on the new deal for 22,000 dockworkers, according to people working in the logistics industry. Shipping costs have also plunged — as have ocean-carrier profits — sparking anxiety about future demand and threatening to weaken employee leverage.

While there haven’t been major disruptions to operations due to the negotiation, “we need to get it done,” said Alan McCorkle, chief executive officer of Yusen Terminals LLC at the Port of Los Angeles. “It’s on people’s minds. It’s a distraction.” 

The sides haven’t announced major progress since they struck a tentative agreement on health benefits just three weeks after the prior contract expired July 1. 

Read Also: How Did The Port Of Los Angeles Go From Boom To Bust?

State of Play

Officials at the ports and White House have said they hoped a new deal between the workers’ International Longshore and Warehouse Union and the Pacific Maritime Association — which acts as a broker for more than 70 terminal operators and ocean liners — would have materialized by now.

“I wish this negotiation was done, but there’s a lot of issues out there they want to get through,” Labor Secretary Marty Walsh said on Feb. 2. 

Walsh — who has been in regular communication with both sides for months — is said to be leaving the Biden administration after being offered the top job as executive director of the NHL Players’ Association. That would leave the Labor Department without a permanent confirmed chief amid the contract talks. 

An agency spokesperson declined to comment on Walsh’s possible departure or how that would affect the administration’s involvement in the talks.

At the Port of Los Angeles — the busiest in the US last year — volumes fell 7% from 2021’s record, the biggest drop since the Great Recession in 2009. That came as consumers reduced demand for imported products, but was also partly because businesses opted to use other ports for their goods due to the perceived uncertainty around the dragged-out talks.  

Executive Director Gene Seroka said West Coast ports risk losing even more cargo to other regions without a deal, especially as the container-shipping industry kicks off its own contract talks over issues like freight rates and vessel space at the end of the month. 

“The sooner, the better,” Seroka said in January.

While activity has eased and provided a breather, all parties “are nervous,” said Julie Gerdeman, chief executive officer of supply-chain risk assessment firm Everstream Analytics. 

“We’re in the calm before the storm — the workers want something done, while shippers are rethinking their strategies to avoid a repeat” of the 2021 supply-chain chaos, she said. 

The ILWU didn’t respond to an emailed request for comment. The PMA declined to comment.

Related News: Labor Disruptions at World’s Ports Quadrupled in 2022 as Discontent Grows

Regional Issues

Both the union and employers have repeatedly said they are committed to keeping freight moving while the talks are ongoing. 

While operations have broadly run smoothly without a contract, disruptions have taken place across some of the 29 ports in California, Oregon and Washington.

In one instance, dockworkers refused to report to the automated yard of a terminal operated by AP Moller-Maersk A/S in Los Angeles, citing safety concerns. Port of Oakland has had similar issues.

A dispute in Seattle between the ILWU and another union over labor assignments by a PMA member also emerged last year, preventing the sides from making progress on issues like automation.

Automation Push

The two sides have been negotiating over automation for decades. The issue was expected to be particularly fraught in this cycle, as the pandemic-era supply-chain chaos highlighted just how important efficient port operations are to the nation’s economic well-being.

The right to automate cargo-handling facilities on the West Coast was bargained in 2008, and the view by employers is that they have paid for the right with costly pensions and other benefits. 

As automation becomes more feasible and widespread, the union has pushed back, demanding more employment guarantees and seeking restrictions on use certain funds for automation and other efficiency enhancements. 

While West Coast talks continue well after the most recent contract expired, union locals and companies operating at East and Gulf Coast ports from Maine to Texas have started negotiations for a new agreement. The current pact expires on Sept. 30, 2024. 

The dockworkers’ International Longshoremen’s Association instructed local employee associations to meet with employers, and talks have been ongoing since mid-December, said James McNamara, an ILA spokesman. 

The ILA and US Maritime Alliance — which represents ocean carriers and terminal operators — may meet later this year for full master-contract talks, though no such meetings have been announced, he said. 

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