West Coast dockworkers and cargo-handling companies are due this week to begin contract negotiations that carry high stakes for an American economy that has been wracked by supply-chain disruptions.
The labor talks cover about 22,400 workers at 29 ports, including the big Southern California facilities that make up the country’s busiest gateway for imported goods. Similar negotiations have been long and contentious in previous years, leading to extensive disruptions and delays in the flow of goods.
The risks have seldom been as high as they are this year.
The bargaining between the International Longshore and Warehouse Union and cargo-handling companies is set to begin Tuesday, two years into a supply-chain crunch that was brought on by the Covid-19 pandemic and that has strained factory production, hobbled retail sales and helped push inflation to a 40-year high.
The sides are scheduled to meet in San Francisco just as U.S. ports are clearing a backlog of container ships and as shipping rates that have reached record levels appear to be stabilizing. But shipping officials say freight networks remain fragile, particularly since the talks might be heating up and tensions running higher just as a new rush of imports is due to hit the ports this summer at the start of the peak shipping season.
“If anything further disrupts the supply chain it will be devastating,” said Jim McKenna, who as head of the Pacific Maritime Association will lead labor talks on behalf of employers including some of the world’s largest ocean shipping lines.
ILWU International President
wrote in an open letter dated Friday that the union seeks “a contract that honors, respects, and protects good American jobs and U.S. importers and exporters.”
Importers of everything from furniture to toys and U.S. exporters of agricultural goods and other products are bracing for potential fallout, not just because 40% of U.S. seaborne imports flow through the 29 ports affected by the talks, but also because past negotiations have led to severe disruptions.
Disagreements between management and labor during two of the three most recent contract negotiations, in 2002 and 2014, caused cargo delays that cost individual manufacturers and retailers millions of dollars in lost revenues.
Dockworkers are expected to demand higher wages, better benefits and limits to the automation of cargo-handling facilities. Industry officials and observers say the union enters the negotiations in a stronger position than usual.
The union’s workers kept operations running throughout the pandemic and handled record cargo volumes. The foreign-based ocean carriers, which own many of the ports’ cargo-handling facilities, cannot plead poverty after reaping billions of dollars in profits in a market in which supply continues to outstrip demand. The White House, which has the authority to intervene if talks reach an impasse, is also viewed as friendly to labor.
Few industry officials expect the talks to be resolved by the time the current contract expires July 1. But there is optimism an agreement can be reached by the end of the year, largely because of the intense focus on the negotiations.
During previous labor talks, the federal government began paying close attention to negotiations after they had proceeded for months, industry officials say. In contrast, notes Brian Ossenbeck, a senior analyst covering transportation and logistics at
& Co., the Biden administration has focused on ports for more than a year, issuing executive orders and pushing logistics firms and shippers to change operations in a bid to ease congestion.
This year’s talks also take place against a backdrop unlike any in recent memory.
A breakdown in the 2014-15 talks was marked by accusations of work slowdowns, and dozens of container ships backed up off California’s ports of Los Angeles and Long Beach during the dispute. This year’s negotiations begin with more than 30 ships already waiting offshore because of supply-chain congestion, although that is down sharply from the 100-plus ships that were backed up at the start of 2022.
Shipping customers have become so used to dealing with port congestion during the past two years that many have adopted mitigation strategies, from holding more inventory to bringing in goods through East Coast and Gulf Coast ports. Some shippers are already putting those lessons to use by ordering back-to-school and holiday goods earlier or by shifting cargoes to alternate gateways.
Write to Paul Berger at [email protected]
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