To prevent further disruptions to the already congested U.S. ports, the National Federation of Retailers (NFR) submitted a letter signed by various trade associations, including ISRI, to President Joe Biden regarding the West Coast port labor negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). The letter was submitted Friday, July 1, the same day as the contract expiration date. It urges the administration to continue working with the parties to reach a new agreement without any disruptions to port operations.
The master contract covers approximately 22,000 workers at 29 ports on the West Coast. Those decisions matter to all U.S. ports because they follow the same terms laid out in the West Coast contract. Negotiations began on May 10 but were suspended until June 1.
Stakeholders are concerned about additional supply chain disruptions given the tumultuous history of these negotiations. The 2002 negotiations saw ILWU work slowdowns and a PMA lockout of dockworkers. During the last set of negotiations in 2015, the U.S. Federal Mediation and Conciliation Service had to step in to help each side come to an agreement. Rising tensions from both parties led to a slow down at the ports and contributed to congestion on the West Coast prior to the 2016 holiday season, according to Logistics Management.
With those problems in mind, stakeholders began expressing concerns about the current negotiations in early 2022. On Feb. 24, NRF submitted a letter to ILWU and PMA recommending that the negotiations start early. “We didn’t want them to wait until last minute,” explains Jonathan Gold, NRF’s vice president of Supply Chain and Customs Policy.
In March, several U.S. senators submitted a letter to President Biden expressing concern that poor negotiations could lead to supply chain constraints, freight congestion, and harm U.S. manufacturing. On May 19, Sen. Diane Feinstein (D-Calif.) sent a letter urging the ILWU and PMA to keep the ports operating by negotiating a fair, long-term labor agreement.
“With the current congestion and supply constraints there’s not the same luxury as five years ago to slow down the system to get results,” says Billy Johnson, ISRI’s chief lobbyist. “These negotiations involve more groups than just ILWU and PMA. There are the ports, the terminals, and the carriers as well. These different groups make negotiations harder to manage.”
One of the contentious items on the table is automation. On May 2, PMA released a study from the University of California at Berkeley analyzing automated terminals at the ports of Los Angeles and Long Beach. The study found that automated terminals can help relieve congestion and generate longshore work faster than conventional terminals. However, ILWU opposes automation, concerned that it will negatively impact jobs and harm the workforce.
U.S. ports have largely not invested in automation or capacity. So, over the years as the amount of cargo arriving at the ports has increased, the ports haven’t adjusted to handle it. “Capacity hasn’t kept pace with the increase in cargo,” Johnson says. “There’s no more room for containers [at the ports].”
After meeting with President Biden on June 14, ILWU and PMA jointly announced that they were unlikely to reach an agreement on a new deal by the deadline.
“[The parties] didn’t start [negotiations] until mid-May, which didn’t leave them a lot of time,” Gold says. “Our letter aims to send a strong signal to the administration to work with the parties to extend the contract during negotiations until a final deal is reached to ensure there won’t be disruptions to cargo movement by either party.”
The letter brings together voices from trade associations across the local, state, and federal levels and represents the agriculture, retail, and manufacturing sectors. “It’s a significant issue that impacts stakeholders across all sectors,” Gold notes.
NRF recommends the administration work with the parties and offer any tools and services to help them reach a new deal. “With all the ongoing disruptions we’re seeing, this would just be an unforced error,” Gold says. “We don’t need it, especially as we see continuing supply chain challenges and increasing inflation, this would have further negative impacts on the supply chain for all stakeholders.”
Companies have already started planning for worst-case scenarios and avoid potential disruptions by shipping cargo early or shipping their cargo to the East Coast or Gulf Coast. These pre-actions have only caused additional areas of congestion and disruption at the ports.
“The port labor negotiations are terribly important to keeping imports and exports moving in the U.S.,” Johnson says. “Any disruption would cause more ripple effects through the nation’s supply chains.”
Photo courtesy of Barrett Ward via unsplash.com.
