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What the current ILWU and PMA contract negotiations mean for shippers

A look at how the upcoming port labor negotiations could impact transportation networks and the shippers that rely on them to get their goods from origin to destination.

As of May 23rd, contract talks between the ILWU and PMA have been suspended until June 1, 2022, however, individual committee meeting between both sides are continuing.

The June 30 deadline for a new labor deal between the International Longshore & Warehouse Union workers (ILWU) and the Pacific Maritime Association (PMA) is beginning to come into clearer view and the potential impacts on shippers, carriers and transportation networks could be significant.

According to the New York Times, the ILWU represents nearly three-fourths of the union members who work at the ports of Long Beach and Los Angeles, the primary gateways for shipments coming to the US from Asia.

“A labor impasse could worsen the floating traffic jams that have kept dozens of ships waiting in the Pacific before they can pull up to the docks,” the publication points out. “That could aggravate shortages and send already high prices for consumer goods soaring.”

This isn’t great news in light of the current supply chain snarls, transportation delays and other pandemic-driven logistics issues that companies are currently working around. “Even in quieter times, the prospect of union negotiations at some of the world’s busiest ports presents the legitimate possibility of a significant impediment to world trade,” the New York Times points out. “These are not quiet times.” 

Retailers are Concerned

The National Retail Federation (NRF) is urging ILWU and PMA to begin contract negotiations well before the upcoming deadline to help ensure continued cargo movement. A potential 7-year contract for the 29 PMA locations that are all under the master contract would cover more than 15,000 port and office workers at some of nation’s busiest water and inland container ports, including Los Angeles, Long Beach, Oakland, Portland, Ore., and Seattle/Tacoma, as well as other waterfront locations along the Pacific Coast.

“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,” NRF President Matthew Shay wrote, as reported by Transport Topics.

Cautiously Optimistic

“We’re optimistic about negotiations and look forward to sitting down with the employers in May,” Willie Adams, ILWU international president, told JOC. “When the handkerchief drops, we’ll be ready,” added PMA President Jim McKenna, who will lead the employers in the negotiations.

“Any cautious optimism is based on the cooperation that was demonstrated by longshore workers and employers in handling the import surge,” JOC adds, “that is now in its 20th month amid the COVID-19 pandemic.”

Worth Watching

Gartner’s Brian Whitlock told Logistics Management that the 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, the renewal comes at a time when US ports remain congested—a situation that’s not expected to ease this year. “If labor disruptions occur during these contract negotiations,” Whitlock added, “it will create compounding disruptions that will further reduce supply chain performance and push port recovery into 2023.”

Next Steps

Contract negotiations between ILWU and West Coast employers are set to begin on May 12. In the meantime, JOC says some cargo owners have already started shifting their volumes to the East and Gulf coasts to avoid any potential problems.

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