- Allen Czermak
Ongoing Contract Negotiations With The West Coast Port Worker Unions
Shipping containers don’t just get unloaded from large marine vessels by themselves. It takes a team of well trained longshoremen to operate expensive cranes to unload these containers from the recent docked ships. Thereafter the transloading operators direct the containers to a transfer area for truck pickup by a logistics partner.
During the early days of the COVID-19 pandemic, our supply chain took a big hit due to the lack of laborers at U.S. ports. This caused a backup of ships sitting outside the ports waiting to be allowed entry. Once the shipping bottleneck was in place it was very difficult to unplug due to high consumer demand for products that lead to increased imports. All that put many water ports littered on the coast of the United States at a backup and big box companies like Walmart and Home Depot searched for alternative routes to keep up with post pandemic demands.
To give you an idea as to how bad the shipping bottleneck at the Port of Long Beach was earlier this year, in February there were 79 vessels waiting to enter the shipping queue. Just a month prior in January, the peak of container ships queuing was at 109. This caused frustration across all sectors of the shipping industries as retail stores waited to replenish their stock and intermodal shipping companies waited at terminals to be loaded. Sometimes the cargo got buried beneath other containers and was simply not accessible for the logistics partners.
Today, congestion is down at the Port of Long Beach and there are 11 cargo vessels waiting to enter the port. Traffic can vary from day to day but it looks like things are under control for now. But there is something looming that if not addressed can lead to another supply chain nightmare, and that is the current contract negotiation with The West Coast Port Worker Unions. The union is supporting the longshoremen's’ request to receive higher pay due to many variables like higher cost of living, inflation, energy prices, and other price hikes that everyday Americans are facing. Naturally the employers don’t want to raise wages and wish to stick with the current agreement and the workers are demanding greater pay. This is what sits in between a riddled domestic economy that cannot afford another supply chain fiasco.
Who Are The West Coast Port Worker Unions?
Better known as The International Longshore and Warehouse Union or ILWU, they are a labor union that represents dock workers on the West Coast of the United States that was established in 1937. The ILWU consists of over 22,000 West Coast port workers, and about 70 employers represented by the Pacific Maritime Association (PMA). Since 1945 the number one goal of the ILWU has been to service the locals and to strengthen unity between the many parts of the union. Each union has their own special interests whether it's financial or political. The ILWU is the mothership of over 50 local unions and allows their voice to be heard for its members' special interests.
The core of the ILWU is the Coast Longshore Division which consists of 30 local unions made up of crane operators, ship mechanics, marine clerks, and longshoremen. The ILWU collaborates with the Pacific Maritime Association that represents employers of the shipping industry. The labor conditions for the workers are defined in the Pacific Coast Clerks’ Contract Document. The document also serves as a collective bargaining agreement that allows both workers and employers to negotiate pay. At the same time the contract serves as a protection to ensure safe working conditions and competitive pay rate.
But the problem is the contract has expired on July 1, 2022 and the negotiations have begun. While both parties negotiate there is always the risk for the workers to strike if they can’t get what they want at the bargaining table. Such a strike will not be handled well by anyone and the employers need to safely navigate the collective bargaining agreement.
West Coast Port Labor Negotiations Coalition Letter To President Biden
On July 1, 2022, the day the contract between the ILWU and the Pacific Maritime Association expired, a letter was delivered to President Biden. The objective of the letter was for the White House administration to work with both sides to ensure there is no breakdown in communication that would potentially lead to a workers strike. As long as both parties were continuing to negotiate a labor deal the workers would remain on the job and a strike would be avoided.
The White House acts as an important arbiter between both parties and the request from West Coast Port Labor Negotiations Coalition is to extend the current contract until an agreement is reached, continue to negotiate in good faith, and do not engage in any activity that may disrupt the laborers work. Having the White House involved shows the seriousness of the contract between the ILWU and the Pacific Maritime Association. It also gives a sense of responsibility to both sides to remain at the bargaining table and keep port operations running smoothly.
What If The Port Workers Strike?
Having the port workers strike would be the worst case scenario as it would definitely disrupt an already weakened supply chain. Cargo ships would stop to be unloaded and the shipping bottleneck would begin to occur as marine vessels would have nowhere to dock on the Western United States seaboard. Keep in mind that this is the shortest route from Asia and ships would have to begin to reroute to water ports that will unload containers. But not every port is equipped with handling such large shipping vessels, especially here in the United States. Our local water ports are far behind major ports such as Rotterdam and Singapore. It would be nothing short of a logistics nightmare if the labor unions choose to strike and that is why the Biden administration must be involved by keeping both sides at the negotiating table.
But not so fast. There is a wild card that the Biden administration can pull out of their deck of cards which is known as the Taft-Hartley Act of 1947. The Labor Management Relations Act of 1947, better known as the Taft–Hartley Act, is a United States federal law that restricts the activities and power of labor unions. This would mean regardless of a labor strike, the union or as in our case, the ILWU would be required by law to remain at the bargaining table. If both parties remain at the table the work must go on and port operations will continue.
However the White House does not want to use that wild card as it will pull the ILWU and the Pacific Maritime Association further apart. The wider the gap between the two the more it will take to bring them back together. In such a scenario it will take a commitment of higher pay rates to continue negotiations even while port operations continue. Try and imagine having a warehouse worker who is forced to work against their will. No one wins as labor efficiency declines due to the communication gap between the laborer and employer.
On November 15, 2021 President Biden's Bipartisan Infrastructure $1.2 trillion Deal was passed in the United States House of Representatives. Ten days later it was signed into law by President Biden. Included in the Bipartisan Infrastructure Law was $14 billion that would be directed to modernize and expand U.S. water ports like the Port of Long Beach in California and Norfolk Harbor in Virginia. But the problem is that right now we are amidst a supply chain crisis and it could take decades before our water ports are equipped to handle the daily cargo traffic efficiently.
Another problem is that the shortest shipping route for containers to be received from Asia is via the Port of Long Beach in California. The water port is owned by a private equity firm Macquarie Infrastructure Partners located in New York City and Sydney, Australia. When private equity firms are at the top they have their own special interest that does not always equal port growth and expansion. To shed a little positivity in regard to water port growth and expansion, the Port of Houston total tonnage across all of its facilities is up 24% year over year. The difference is that the Port of Houston is operated and owned by the State of Texas. The benefits of expansion and growth benefit the locals and help sustain the local economy. In order for there to be growth and expansion of all major water ports in the United States there needs to be something in it for the locals, not private equity firms. Until then we will be subject to ongoing negotiations between employers and laborers to keep U.S. water ports operating. Our hope is that the private sector in collaboration with the government gets involved and local interest is a part of sustaining and growing our biggest ports that will eventually ease cargo traffic congestion and strengthen the domestic and global supply chains.