ERP & Enterprise Systems
Sharks vs. Jets on the West Coast Waterfront?

Here's a question for U.S. exporters who were grievously harmed by the West Coast longshore labor slowdown in late 2014 and early 2015: Would it make you feel any better to learn that you were the victims of "a street brawl"?

Sharks vs. Jets on the West Coast Waterfront?

That's how Robert McEllrath, international president of the International Longshore and Warehouse Union (ILWU), sees it. Also as "a good old-fashioned donnybrook." Those were two of the terms that he used to describe the near-paralysis that gripped West Coast ports during months of painful negotiations over a new contract with terminal operators.

McEllrath was speaking at the Journal of Commerce’s 16th annual Trans-Pacific Maritime (TPM) Conference in Long Beach, Calif., where he was joined by his counterpart on the employers’ side of the bargaining table, Pacific Maritime Association president and chief executive officer James McKenna.

Both phrases seemed oddly inappropriate, given the extent of the damage that was wreaked by the union’s refusal to supply adequate crews working at full speed for nearly three months. But McEllrath wouldn’t even admit to ILWU’s culpability for the logjam, referring at one point to “the so-called slowdown,” and blaming management for refusing to order sufficient gangs to work the ships. (What employers did, countered McKenna, was decline to pay overtime to workers who were functioning at half their usual level of productivity.) This despite hard statistics showing that crane productivity at the ports of Seattle and Tacoma plunged suddenly from 28 moves per hour to 18, and that the number of yard-tractor workers dispatched from the hiring hall fell from 135 per day to around 30. Of course those numbers magically returned to normal when union and management reached tentative agreement on a new contract in February of 2015.

Dave Arian, former president of ILWU’s Local 13 and now vice president of the Los Angeles Board of Harbor Commissioners, admitted on a later panel at TPM that the union had engaged in a “job action.” But maybe the precise term for the ILWU’s behavior isn’t the point. What’s important is that, according to one estimate, labor delays along the West Coast reduced real U.S. export growth by 1.5 percentage points in the first quarter of 2015, and shaved 0.2 percentage point off real GDP growth.

Should those numbers seem small to you, think of the hundreds of U.S. exporters who lost sales and suffered ruined agricultural goods during the slowdown. Japan turned to Argentina for hay, Turkey for almonds and Poland for potatoes, said Peter Friedmann, executive director of the Agriculture Transportation Coalition. In the Pacific Northwest, apples grown for export sale were instead used for fertilizer on domestic potato fields because they couldn’t make it to market before rotting.

Some overseas accounts were lost for good. “Once you begin a new source, you don’t need to come back,” Friedmann said, adding that U.S. exporters got stuck with a reputation for being undependable suppliers. Winning back the trust of foreign buyers, at a time when U.S. exporters are already experiencing stiff headwinds from the strong dollar, could take years.

Labor and management have offered various reasons for the prolonged negotiations. According to McEllrath and McKenna, the two sides got hung up over health and welfare benefits, the mechanics of the arbitration process, and jurisdiction over chassis inspection. (The last became an especially thorny issue when ocean carriers divested their chassis, and turned them over to intermodal equipment providers.) All were valid issues for discussion, but were they worth bringing West Coast ports to a screeching halt over?

“I don’t think either one of us envisioned [what happened],” admitted McKenna. “Nobody likes to get to a point where we’re in a strike situation. We need to find a better way to get [results].”

Various interests have differing ideas about what that “better way” might look like. The latest dispute brought calls from shippers and retailers for tighter government control over dockside labor. Representatives Dan Newhouse (R-WA) and Kurt Schrader (D-OR) introduced a bill to create certain “triggers” that would require the President to exercise emergency authority that could lead to a judicial injunction against strikers. A similar proposal arose in the Senate. There was also talk of placing longshore labor under the authority of the Railway Labor Act, which would prohibit dock strikes altogether.

Neither management nor labor seems to like those proposals. “The bills in Washington would be opening a Pandora’s box,” said McEllrath. “I hope everybody calms down and stops.” Warned McKenna: “Unless we collectively find a better way to approach and resolve these contracts, somebody from Washington, D.C. is going to try and help us.”

They’re not liable to get much sympathy from shippers, who are a long way from “calming down.” The slowdown “cost companies millions and millions of dollars,” said Jonathan Gold, vice president of supply chain and customs policy with the National Retail Federation. “Are companies going to forget what happened? No – it’s going to be stuck in our minds.”

Whether labor peace will now reign on the West Coast is uncertain. But there was a ray of hope at TPM. McEllrath said ILWU would consider extending the current contract beyond its 2019 expiration date, in the wake of similar discussions between employers and longshore workers on the East Coast. Upon receipt of a formal request from PMA, he said, the union would seriously consider the idea.

Replied McKenna: “You can look for a letter about an extension.”

Comment on This Article

That's how Robert McEllrath, international president of the International Longshore and Warehouse Union (ILWU), sees it. Also as "a good old-fashioned donnybrook." Those were two of the terms that he used to describe the near-paralysis that gripped West Coast ports during months of painful negotiations over a new contract with terminal operators.

McEllrath was speaking at the Journal of Commerce’s 16th annual Trans-Pacific Maritime (TPM) Conference in Long Beach, Calif., where he was joined by his counterpart on the employers’ side of the bargaining table, Pacific Maritime Association president and chief executive officer James McKenna.

Both phrases seemed oddly inappropriate, given the extent of the damage that was wreaked by the union’s refusal to supply adequate crews working at full speed for nearly three months. But McEllrath wouldn’t even admit to ILWU’s culpability for the logjam, referring at one point to “the so-called slowdown,” and blaming management for refusing to order sufficient gangs to work the ships. (What employers did, countered McKenna, was decline to pay overtime to workers who were functioning at half their usual level of productivity.) This despite hard statistics showing that crane productivity at the ports of Seattle and Tacoma plunged suddenly from 28 moves per hour to 18, and that the number of yard-tractor workers dispatched from the hiring hall fell from 135 per day to around 30. Of course those numbers magically returned to normal when union and management reached tentative agreement on a new contract in February of 2015.

Dave Arian, former president of ILWU’s Local 13 and now vice president of the Los Angeles Board of Harbor Commissioners, admitted on a later panel at TPM that the union had engaged in a “job action.” But maybe the precise term for the ILWU’s behavior isn’t the point. What’s important is that, according to one estimate, labor delays along the West Coast reduced real U.S. export growth by 1.5 percentage points in the first quarter of 2015, and shaved 0.2 percentage point off real GDP growth.

Should those numbers seem small to you, think of the hundreds of U.S. exporters who lost sales and suffered ruined agricultural goods during the slowdown. Japan turned to Argentina for hay, Turkey for almonds and Poland for potatoes, said Peter Friedmann, executive director of the Agriculture Transportation Coalition. In the Pacific Northwest, apples grown for export sale were instead used for fertilizer on domestic potato fields because they couldn’t make it to market before rotting.

Some overseas accounts were lost for good. “Once you begin a new source, you don’t need to come back,” Friedmann said, adding that U.S. exporters got stuck with a reputation for being undependable suppliers. Winning back the trust of foreign buyers, at a time when U.S. exporters are already experiencing stiff headwinds from the strong dollar, could take years.

Labor and management have offered various reasons for the prolonged negotiations. According to McEllrath and McKenna, the two sides got hung up over health and welfare benefits, the mechanics of the arbitration process, and jurisdiction over chassis inspection. (The last became an especially thorny issue when ocean carriers divested their chassis, and turned them over to intermodal equipment providers.) All were valid issues for discussion, but were they worth bringing West Coast ports to a screeching halt over?

“I don’t think either one of us envisioned [what happened],” admitted McKenna. “Nobody likes to get to a point where we’re in a strike situation. We need to find a better way to get [results].”

Various interests have differing ideas about what that “better way” might look like. The latest dispute brought calls from shippers and retailers for tighter government control over dockside labor. Representatives Dan Newhouse (R-WA) and Kurt Schrader (D-OR) introduced a bill to create certain “triggers” that would require the President to exercise emergency authority that could lead to a judicial injunction against strikers. A similar proposal arose in the Senate. There was also talk of placing longshore labor under the authority of the Railway Labor Act, which would prohibit dock strikes altogether.

Neither management nor labor seems to like those proposals. “The bills in Washington would be opening a Pandora’s box,” said McEllrath. “I hope everybody calms down and stops.” Warned McKenna: “Unless we collectively find a better way to approach and resolve these contracts, somebody from Washington, D.C. is going to try and help us.”

They’re not liable to get much sympathy from shippers, who are a long way from “calming down.” The slowdown “cost companies millions and millions of dollars,” said Jonathan Gold, vice president of supply chain and customs policy with the National Retail Federation. “Are companies going to forget what happened? No – it’s going to be stuck in our minds.”

Whether labor peace will now reign on the West Coast is uncertain. But there was a ray of hope at TPM. McEllrath said ILWU would consider extending the current contract beyond its 2019 expiration date, in the wake of similar discussions between employers and longshore workers on the East Coast. Upon receipt of a formal request from PMA, he said, the union would seriously consider the idea.

Replied McKenna: “You can look for a letter about an extension.”

Comment on This Article

Sharks vs. Jets on the West Coast Waterfront?