As congestion at the Los Angeles and Long Beach ports shows signs of easing, industry experts are looking ahead to next year’s contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). There is growing concern that any gains made regarding supply chain issues in the US may be completely lost, and that the next wave of congestion could be more severe.
The port workers’ contract is set to expire at the end of June 2022, and next year’s contract negotiations are expected to be centered around the following issues: automation and technological advancement, worker’s pay, and port conditions.
“These negotiations have the potential to be very contentious because port workers could interpret the desire for automation as a sign that jobs will be lost,” said Peter Hsieh, Vice President of Sales and Marketing for OEC Group’s Northeast Region. “Additionally, the industry has seen record profits posted by carriers and terminals alike in recent quarters, and only naturally, the Unions are going to want a piece of the pie. Consequently, if a new agreement is not reached amicably and a strike ensues, the effect on the strained market will be significant because no cargo will be moved, and the West Coast supply chain will finally grind to a halt.”
Automation and overall technological advancement have been main roadblocks in negotiations between the two sides for more than twenty years. This disagreement began in 2002 when the PMA fought for general computerization of port operations. At that time, the two sides were so far apart that West Coast dockworkers were locked out for ten days, forcing President George W. Bush to invoke the Taft-Hartley Act. The 2014 contract negotiations featured even more discord. Slowdowns by the ILWU were widespread across West Coast ports, and the PMA refused to pay any overtime wages.
“Since 2002, these negotiations tend to significantly affect productivity on the West Coast, and right now, any disruptions at that major gateway have the potential to create severe backlogs,” said Frank Costa, Vice President of Sales for OEC Group’s Northeast Region. “This could also lead to sympathetic strikes across all U.S. ports, because what happens at Los Angeles and Long Beach, such as automation and loss of jobs, can easily happen somewhere else. Therefore, I advise all importers to work closely with their sales consultants and plan alternate ports of discharge well in advance.”