Executive Briefings

A Vow After West Coast Port Disruption: Never Again

Typically, when a protracted longshore labor dispute comes to an end, and operations on the docks return to normal, all parties vow to move forward and bury any residual acrimony. This time around, that might not be the case.

A Vow After West Coast Port Disruption: Never Again

West Coast dockside labor and management are certainly giving lip service to a renewed spirit of cooperation, following ratification of a new five-year contract, retroactive to July 1, 2014. Speaking for terminal operators, Pacific Maritime Association president and chief executive officer Jim McKenna said the pact "provides an important framework for the hard work ahead to overcome new competitive challenges and to continue to position the West Coast ports as destinations of choice for shippers worldwide." He insisted that "our interests are aligned" toward ensuring that the region's ports continue to operate efficiently, in order to handle future growth in container volumes.

A statement by the International Longshore and Warehouse Union, whose members approved the contract by a margin of 82 percent, said it will “maintain excellent health benefits, improve wages, pensions and job safety protections; limit outsourcing of jobs and provide an improved system for resolving job disputes.”

Los Angeles Mayor Eric Garcetti expressed gratitude over conclusion of the talks, thanking, among others, PMA and ILWU leadership “for their partnership in resolving their differences and putting this critical economic engine back on track.”

Following tentative approval of the contract by ILWU and PMA negotiators in February of this year, longshore workers began clearing out the massive logjam of ships that were waiting to be unloaded at every major West Coast port. The backup was the direct result of a months-long slowdown by ILWU members, who, in protest of the drawn-out negotiations, and shielded by a lack of arbitration requirements, suddenly began withholding the labor that was needed to work the ships.

Now the shipping channels are clear, and manning levels have returned to normal. But the pain that the union wrought hasn’t been forgotten. Importers and exporters had to incur huge expenses to get their products to market, or simply failed to do so. The Agriculture Transportation Coalition (AgTC) has estimated that losses in agricultural sales alone reached $1.75bn per month. Many of the hardest-hit companies were small or medium-sized businesses that operate in highly competitive markets, and can’t afford the slightest disruption to their supply chains.

West Coast ports, so dominant in the age of trans-Pacific trade, lost a good deal of market share. Just in the month of April, East and Gulf Coast ports saw volume increases of 12 percent and 20 percent, respectively, while activity at West Coast ports dropped 4 percent, according to the Journal of Commerce. Much of that business will now return to the West Coast, of course, but shippers are paying serious attention to locating permanent alternative gateways.

Retailers aren’t climbing aboard the Good Ship Harmony. The National Retail Federation issued a statement declaring itself “happy” to see the contract ratified. At the same time, NRF warned that “it’s not going to be long before we go through this process all over again.”

The retailers’ group was even more blunt than that. “The past year was fraught with disruptions, slowdowns and partial shutdowns,” it said. “This is something we will no longer tolerate.” NRF called on negotiators to begin their talks early enough to have a new contract in place before the old one expires, “without active or passive threats to the economy and the millions of jobs dependent on our nation’s ports and supply chain.

“The current process is impractical and unsustainable and fails to meet even the most basic requirements of a modern, global supply chain,” NRF said.

Industry ought to go even further, to ask a basic question: should a highly compensated group of longshore workers be permitted to hold an entire nation’s economy hostage, when they don’t get their way?

Congress just is beginning to tiptoe into the issue. Four Republican senators have introduced S. 1298, a bill that would monitor the impact of port disruptions on the economy, and set the stage for faster government intervention when they occur. The bill’s provisions sound fairly innocuous, calling for the U.S. Department of Transportation’s Bureau of Transportation Statistics to set up a port performance statistics program, and for the Secretary of Transportation to report to Congress on the state of port operations before and after the expiration of a longshore labor contract.

The last thing we need is another statistics-stuffed government report that gathers dust on the shelf. But S. 1298, or a similar measure, is just the opening salvo in an effort to prevent a replay of the inexcusable events of the past year. Last time, all ILWU had to do was refuse to extend the arbitration provisions of the previous contract. Then its members could act with impunity, daring management to lock them out and take the blame for the shutdown. Employers didn’t bite, but the impact on the nation’s commerce was no less severe.

AgTC has fired off a letter of support to the sponsors of S. 1298, calling it “a strong first step to demonstrating that Congress will not stand by idly and allow U.S. agriculture exports to lose our hard-earned foreign customers, due to port congestion and dysfunction relating to longshore labor negotiations (or any other factors).”

Still to come is a means of measuring port productivity and determining the severity of a disruption – all the while preserving the union’s right to a fair wage and collective bargaining. For many whose livelihood depends on a smoothly functioning network of ports, however, the time for change is now.

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West Coast dockside labor and management are certainly giving lip service to a renewed spirit of cooperation, following ratification of a new five-year contract, retroactive to July 1, 2014. Speaking for terminal operators, Pacific Maritime Association president and chief executive officer Jim McKenna said the pact "provides an important framework for the hard work ahead to overcome new competitive challenges and to continue to position the West Coast ports as destinations of choice for shippers worldwide." He insisted that "our interests are aligned" toward ensuring that the region's ports continue to operate efficiently, in order to handle future growth in container volumes.

A statement by the International Longshore and Warehouse Union, whose members approved the contract by a margin of 82 percent, said it will “maintain excellent health benefits, improve wages, pensions and job safety protections; limit outsourcing of jobs and provide an improved system for resolving job disputes.”

Los Angeles Mayor Eric Garcetti expressed gratitude over conclusion of the talks, thanking, among others, PMA and ILWU leadership “for their partnership in resolving their differences and putting this critical economic engine back on track.”

Following tentative approval of the contract by ILWU and PMA negotiators in February of this year, longshore workers began clearing out the massive logjam of ships that were waiting to be unloaded at every major West Coast port. The backup was the direct result of a months-long slowdown by ILWU members, who, in protest of the drawn-out negotiations, and shielded by a lack of arbitration requirements, suddenly began withholding the labor that was needed to work the ships.

Now the shipping channels are clear, and manning levels have returned to normal. But the pain that the union wrought hasn’t been forgotten. Importers and exporters had to incur huge expenses to get their products to market, or simply failed to do so. The Agriculture Transportation Coalition (AgTC) has estimated that losses in agricultural sales alone reached $1.75bn per month. Many of the hardest-hit companies were small or medium-sized businesses that operate in highly competitive markets, and can’t afford the slightest disruption to their supply chains.

West Coast ports, so dominant in the age of trans-Pacific trade, lost a good deal of market share. Just in the month of April, East and Gulf Coast ports saw volume increases of 12 percent and 20 percent, respectively, while activity at West Coast ports dropped 4 percent, according to the Journal of Commerce. Much of that business will now return to the West Coast, of course, but shippers are paying serious attention to locating permanent alternative gateways.

Retailers aren’t climbing aboard the Good Ship Harmony. The National Retail Federation issued a statement declaring itself “happy” to see the contract ratified. At the same time, NRF warned that “it’s not going to be long before we go through this process all over again.”

The retailers’ group was even more blunt than that. “The past year was fraught with disruptions, slowdowns and partial shutdowns,” it said. “This is something we will no longer tolerate.” NRF called on negotiators to begin their talks early enough to have a new contract in place before the old one expires, “without active or passive threats to the economy and the millions of jobs dependent on our nation’s ports and supply chain.

“The current process is impractical and unsustainable and fails to meet even the most basic requirements of a modern, global supply chain,” NRF said.

Industry ought to go even further, to ask a basic question: should a highly compensated group of longshore workers be permitted to hold an entire nation’s economy hostage, when they don’t get their way?

Congress just is beginning to tiptoe into the issue. Four Republican senators have introduced S. 1298, a bill that would monitor the impact of port disruptions on the economy, and set the stage for faster government intervention when they occur. The bill’s provisions sound fairly innocuous, calling for the U.S. Department of Transportation’s Bureau of Transportation Statistics to set up a port performance statistics program, and for the Secretary of Transportation to report to Congress on the state of port operations before and after the expiration of a longshore labor contract.

The last thing we need is another statistics-stuffed government report that gathers dust on the shelf. But S. 1298, or a similar measure, is just the opening salvo in an effort to prevent a replay of the inexcusable events of the past year. Last time, all ILWU had to do was refuse to extend the arbitration provisions of the previous contract. Then its members could act with impunity, daring management to lock them out and take the blame for the shutdown. Employers didn’t bite, but the impact on the nation’s commerce was no less severe.

AgTC has fired off a letter of support to the sponsors of S. 1298, calling it “a strong first step to demonstrating that Congress will not stand by idly and allow U.S. agriculture exports to lose our hard-earned foreign customers, due to port congestion and dysfunction relating to longshore labor negotiations (or any other factors).”

Still to come is a means of measuring port productivity and determining the severity of a disruption – all the while preserving the union’s right to a fair wage and collective bargaining. For many whose livelihood depends on a smoothly functioning network of ports, however, the time for change is now.

Comment on This Article

A Vow After West Coast Port Disruption: Never Again