With West Coast dockworker contracts expiring July 1, shippers are preparing for the possibility that contentious negotiations could cause shipping delays, according to The Wall Street Journal (subscription).
Labor talks: There is currently no formal start date for labor talks between West Coast dockworkers and terminal employers. The talks will attempt to replace an agreement expiring July 1 and will cover more than 22,000 dockworkers at 29 ports ranging from Washington to Southern California. Previous labor talks have taken months to resolve and caused backlogs at California ports. The Pacific Maritime Association, representing terminal employers, says it is ready to begin talks today, but the union representing West Coast dockworkers says it won’t be ready until May.
Negotiation points: The two sides will have to reach agreements on issues ranging from pay and benefits to automation and facility rules.
Why it matters: The ports of Los Angeles and Long Beach alone handle nearly 40% of U.S. container imports. Other U.S. ports would struggle to process that amount of cargo should labor negotiations with West Coast dockworkers stall.
Shippers plan ahead: “Some shippers are pulling forward their holiday-season orders to get them into domestic networks early, logistics operators said, and many are diverting cargo that normally moves through the West Coast to East Coast and Gulf Coast ports.”
Supply chain snarls: This year’s labor talks will take place as pandemic-related supply chain congestion is already causing major backlogs and delays at West Coast ports. Shippers have begun routing cargo elsewhere to avoid the delays, leading to backlogs at other U.S. ports.
Our take: “Any further disruptions at America’s ports, and primarily at our West Coast ports, would exacerbate existing challenges in a supply chain stretched to its limit over the past two years. The economic impacts of a stalled negotiation could be historically detrimental. We are encouraging the relevant parties to engage in preliminary negotiations now, to avoid any potential slowdown in productivity on the West Coast, and urging leaders in Washington to do the same,” stated NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist.