While the negotiations on a new contract between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) are set to begin in May, prior to the expiration of the existing deal on June 30, the ILWU’s top executive expressed optimism that a new deal will come to fruition.
The ILWU represents nearly 14,000 port workers in California, Oregon, and Washington, with more than 40 percent of U.S. incoming container traffic moving through West Coast ports at the Ports of Los Angeles and Long Beach, according to industry estimates. The PMA represents shipping lines and terminal operators at 29 West Coast ports.
As previously noted in LM, this is not the first time a contract between the organizations has been set to expire. And one does not have to go too far back to see how acrimonious negotiations were, as in 2015, in the months prior to the June 30 deadline, it required the U.S. Federal Mediation and Conciliation Service to step in to help the sides find a way to come to an agreement over stalled labor negotiations. What’s more, the ongoing tension between the parties subsequently resulted in hindered productivity and also was a contributing factor in port congestion on the West Coast, especially as it led up to the 2016 holiday season. The PMA said, at the time, that the state of terminal productivity at the five largest West Coast ports was approaching gridlock, due in large part to what it labeled ILWU-staged shutdowns.
Earlier this week, ILWU President Willie Adams said in an interview with Port of Los Angeles (POLA) Executive Director Gene Seroka on the port’s monthly media call that fears about getting a deal done may be overblown.
“There are adults on both sides of the table, it is called a process,” said Adams. “I believe in the American process of collective bargaining. That is a right as an American. We will get an agreement. It takes both sides, and right now we are getting ready. The other side, they are doing what they have to do. Sometime in May we are going to sit down, and we are going to get an agreement, and I wish, instead of people writing things and saying we are going to throw the baby out with the bathwater…they ought to be talking about the positive things out of Covid, all of the good things that have come out of this.”
To that end, he said there has been a heavy focus on ports and infrastructure, as well as other things that will benefit Americans and American workers.
Adams added that getting a new deal done requires collaboration between the two parties, likening it to a marriage, in that there are some bumps and ups and downs.
“We will get an agreement,” he said.
Seroka said on the call that POLA is in close contact with both the ILWU and PMA.
“We work with these folks day in and day out,” he said. “I think both sides understand how vital they are to the U.S. economy. And this contract—like others in the past—it is very important to work through the issues and get out to the other side while the rank and file continues to move the cargo. We are only a phone call or a text away at a moment’s notice if either side needs us. The White House and Cabinet members throughout the Administration are keeping a close eye, but they respect the National Labor Relations Act and the CBA (collective bargaining agreement) that both sides have had in place for many, many decades. We will continue to watch this, as many others will and will be available as needed. But trust the process, as Willie had said, and know the experts will be on both sides of the table to hammer out a deal.”
Earlier this year, in a letter to the ILWU’s Adams and PMA Chairman and CEO James McKenna, NRF President and CEO Matthew Shay urged them to begin contract negotiations as soon as possible. Shay explained that NRF applauds the close partnership ILWU and PMA have achieved throughout the pandemic, coupled with the ability to deal with the unprecedented cargo surge over the past two years.
“As many expect the supply chain disruptions to continue through 2022, contract negotiations should not lead to additional pressures of disruption to the supply chain,” wrote Shay. “We know key issues for both parties need to be worked out during this contract negotiation and believe the parties should sit down now and not wait to begin negotiations. Both parties should attempt to reach a contract well before expiration for the benefit of the national economy and to provide the needed certainty to all the stakeholders in the supply chain that rely on the U.S. West Coast ports. We would further ask that you issue a statement committing to the commencement of meaningful negotiations now, and to commit to continue negotiating and working without interruption, even if negotiations extend beyond the June 30 contract expiration.”
The NRF’s top executive went on to note that with West Coast port congestion issues front and center, there is a need to ensure negotiations don’t subsequently result in additional congestion issues, especially as NRF membership will be gearing up for the 2022 peak shipping season, in tandem with the timing of the expiration of the current contract. What’s more, he observed that additional disruptions will impact not only NRF members but also other supply chain stakeholders that use West Coast ports.
And he did not mince words in explaining that an NRF member survey highlighted that “even the perceived risk of a disruption will force retailers to reevaluate their use of U.S. West Coast ports, noting that “without a clear commitment to keep negotiating, cargo shifts to other gateways would likely happen even if a disruption never occurs, simply due to the need to mitigate the risk of a disruption.”
Brian Whitlock, Senior Director Analyst with Gartner’s Supply Chain practice, said that this contract renewal is important for two reasons.
“First, it was extended in 2017 and was last negotiated in 2015,” he said. “That means the current agreement has run for seven years without change. Second, this contract renewal comes at a time when U.S. ports are highly congested and it is forecast to take the better part of 2022 to recover. If labor disruptions occur during these contract negotiations, it will create compounding disruptions that will further reduce supply chain performance and push port recovery into 2023.”
Whitlock went on to comment that over the past year, the balance of power has shifted to labor in all sectors.
“With the widespread media attention on shipping delays and impacts on holiday shopping, the PMA will need to contend with an American public that knows more about ports today than they ever have,” he said. “And during President Biden’s tour of the Baltimore port, he encouraged companies to see the value in creating well-paying jobs. These events have put a lot of wind in the sails of the ILWU.
As for a best-case scenario, Whitlock said that would be one in which the PMA reaches an agreement with the ILWU before the contract expires, avoiding labor actions or work slowdowns, while retaining their right to automate without union interference. And the worst-case scenario, he said, is that contract negotiations drag on for months past the contract deadline, resulting in worker slowdowns and severe congestion and backlogs at the ports.
About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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