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Port Contract Expiration Threatens Supply Chain

The contract governing 22,000 union workers at 29 West Coast ports will expire in June, and a work slowdown or stoppage would have an enormous impact on the supply chain and the economy as a whole.

  • These ports, stretching from Los Angeles to Seattle, account for nearly 45% of all shipping container traffic in the U.S.
  • Any disruption of service at these locations would dramatically delay nationwide cargo movement and exacerbate the problems that have plagued the shipping supply chain throughout the pandemic.

The background: The last time this contract was up for negotiation, in July 2014, the International Longshore and Warehouse Union and its employer group, the Pacific Maritime Association, were unable to come to an agreement before the deadline.

  • By January 2015, a federal mediator was assigned to intervene, and the conflict was ultimately resolved.
  • That contract is set to expire in just more than two months, leading to fears of a West Coast port work slowdown or stoppage.  

The cost: At the time of the 2014 negotiations, the NAM produced an economic impact study, which found that a five-day West Coast port stoppage would disrupt 73,000 jobs and cause a nearly $2 billion loss to the U.S. economy every day.

  • Today, with supply chain issues exacerbated by COVID-19, the threat is even greater and could lead to higher prices, production shutdowns and lost income across the country.

What we’re doing: The NAM has been deeply involved in this issue and is communicating with federal policymakers to urge preemptive negotiations.

  • During the most recent NAM Ports & Ocean Shipping Task Force meeting, manufacturers heard from Tim Lynch, senior director of Morgan Lewis’ government relations practice and an adviser to the PMA in their negotiations.
  • He reiterated the important role that groups like the NAM can play in this process, saying, “Engagement from the business community, U.S. shippers and affected stakeholders provides a critical voice as this process advances.”

NAM President and CEO Jay Timmons recently urged the White House to take action as part of a larger effort to combat inflation and promote economic growth. Ultimately, the NAM’s goal is to encourage a resolution as soon as possible.

The last word: “America’s shipping supply chain has been rocked by the events of the past 24 months. Container costs have skyrocketed, and delivery schedules that once took a few weeks are now running months beyond historic norms,” said NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist.

  • “Any further disruption of West Coast operations would have catastrophic effects on the ability of the American economy to keep pace and keep growing.”
  • “It’s incumbent on our nation’s leaders to bring these groups together for a quick and agreeable resolution that prevents additional economic harm for manufacturers and their employees.”

To receive updates from the NAM Ports & Ocean Shipping Task Force related to this issue and other shipping supply chain developments, please contact Ben Siegrist at  [email protected].

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