Labor Talks Begin Monday That Could Hurt Cargo Shipments To The US This Summer

  @angeloyoung_a.young@ibtimes.com on May 12 2014 11:52 AM
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Striking workers carry placards past cranes sitting idle, surrounded by shipping container, Dec. 4, 2012, at the Port of Los Angeles in Southern California. The strike at the busiest port in the U.S. lasted eight days after 600 clerical workers walked off the job over concerns their labor was being outsourced. Negotiations begin Monday between longshoremen and warehouse workers to work out their next six-year contract. In 2002, these talks led to an 11-day strike that cost billions of dollars and led to President George Bush invoking executive power to re-open the ports. ROBYN BECK/AFP/Getty Images

Come next Christmas, consumers may feel the impact of labor negotiations that are starting today.

West Coast shipyard workers' contract with the Pacific Maritime Association (PMA) expires in two months. The International Longshore and Warehouse Union (ILWU), which represents approximately 13,600 port employees in California, Oregon and Washington, is likely to butt heads with the PMA, which administers labor agreements and represents employers, over the terms of a new agreement. Talks, "historically continue into mid-July," Wade Gates, managing director of workplace and labor communications at Burson-Marsteller, which is representing PMA, said in an email.

Retailers across the country will keep a close eye on the talks: more than 40 percent of the country's incoming container traffic passes through West Coast ports as it ferries everything from Chinese toys to Indian apparel to the continental U.S. Many retailers use the summer months to plan orders and shipments from abroad in anticipation of the holiday shopping season. 
 
“We’ve told our clients to build up their inventory by June 30, so if there is any problem in July, they won’t suffer. But they don’t have much time left,” Enrico Salvo, chairman of Carmichael International Service, a freight broker that works primarily with apparel companies, told Apparel News. 
 

High on the list of the longshore workers' concerns is securing their collective bargaining position against competing unions. They’re also demanding a “reasonable approach to new technology” that doesn’t replace workers with automation.

On the other side of the negotiating table, the PMA points to lost market share and the need to increase efficiency to maintain a competitive advantage against ports in Canada, Mexico and the Gulf and East Coasts in the U.S.

Between 2008 and 2013, the 29 ports in Washington, Oregon and California saw market share against other ports in the U.S. decline from 48.6 percent to 43.5 percent, according to U.S. trade data.

The PMA claims that annual earnings for a full-time longshoreman average $132,046, plus generous no-deductible health benefits. But the ILUW points out that although the current labor contract calls for $35 an hour for the most experienced workers, or $72,800 a year at full time, the PMA’s 2013 annual report shows that about 34 percent of longshore workers get less than 1,600 hours of work a year, or about 30 hours a week.

If history is any guide, these talks could run up to the last day of the current contract period and involve work slowdowns--if not complete work stoppages--before an agreement is reached. In 2002, negotiations got so ugly that President George W. Bush had to invoke his executive power to end an 11-day shutdown of West Coast ports, citing the port's' operations as ''vital to our economy and to our military.'' A study by the University of California at Berkeley that year estimated that total cost of shutting down the West Coast ports was about $2 billion a day in lost business and tax revenue from sales and wages. The strike also created a backlog of cargo that took weeks to alleviate.

The last time these negotiations took place, in 2008, a tentative agreement was reached four weeks after the previous contract expired. During those talks, workers took coordinated lengthy work breaks and brought container traffic to a crawl. In some cases, partially loaded ships disembarked in order to stay on schedule. Businesses that rely on maritime shipping are hoping things will go more smoothly this time.

“For a lot of retailers, planning started months ago in anticipation of any slowdown or strike,” said Jonathan Gold, a supply chain and customs expert at the National Retail Federation trade group. “This doesn’t just impact retailers, it impacts manufacturers and anyone else shipping goods.”

The alternatives include having goods delivered through Gulf Coast and East Coast ports in the U.S., through ports in Canada and Mexico, or by air--all of which are more costly. And if retailers have to spend more to get products on their shelves, consumers will pay higher prices when they want something to put under the tree.   

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