December 3, 2023

A contract between shipping companies and 22,000 West Coast dock workers expired over the weekend. But both sides kept talking and said they wanted to avoid a blow that could hit an economy already grappling with high inflation and supply chain problems.

The contract that expired last Friday covers workers at ports from California to Washington state that handle nearly 40% of US imports.

“While there will be no contract extension, shipments will continue to move, and normal port operations will continue until an agreement is reached,” a joint statement from the Pacific Maritime Association and the International Federation of Warehouses and Warehouses said.

ILWU is the union representing Pacific dock workers, and the Pacific Maritime Association is a trade group for freight carriers and terminal operators. Its members include global shipping giants such as Maersk and Evergreen Marine.

The talks are so crucial that President Joe Biden stepped in last month and met both sides in Los Angeles. They occur against the background of rising imports that left a backlog of ships anchored abroad, and declining exports.

Both sides said last month that they were not planning any disruptions at work, but it is clear that US industries are concerned.

In a letter to Biden issued hours before the last contract expired, about 150 trade groups ranging from truck drivers to the agricultural, chemical and toy industries urged the administration to work with both parties to extend the existing contract, negotiate in good faith and agree to avoid actions. That further disable ports.

The letter stressed that groups are entering peak season for imports as retailers stock merchandise for fall vacation and back-to-school items.

“We continue to expect merchandise flows to remain at all-time highs, adding to the pressure on the supply chain and driving up inflation,” the letter read. “Many expect these challenges to continue through the remainder of the year.”

The main issue in the talks is the automation of port facilities. The union argues that it will cost the jobs of crane operators and other workers, who can earn $100,000 or more a year. The Pacific Maritime Association argues that automation will actually increase employment by enabling ports to move more cargo.

Ports are already struggling to handle container traffic, mostly from Asia, where ports are highly automated.

After the COVID-19 pandemic began to spread in 2020, freight traffic to ports has significantly decreased. But then it recovered and has thrived ever since. The increased demand has led to traffic congestion at the ports of Los Angeles and Long Beach, which in 2021 alone transported about 20 million shipping containers. The ports, collectively known as the San Pedro Bay Port Complex, alone handle more than 30% of containerized imports and exports in the United States.

About 100 ships were waiting to enter the port complex in January, but that total is now down to 60, or even 20 at times, Mario Cordero, the executive director of the Port of Long Beach, said Tuesday.

On average, Cordero said, cargo is loaded and unloaded 16 hours a day. However, he said the ports need a “24-7 mentality” to handle Asian traffic, with ports operating around the clock.

Contracts are renegotiated every six years, and Cordero said most of them are done without interruption.

However, the shutdown in 2002 and the eight-day strike in 2015 cost the US economy billions of dollars and forced the administrations of then-Presidents George W. Bush and Barack Obama to intervene.

Cordero said he did not see any slowdown in work at the port and was optimistic that the current negotiations would end with a fairly quick solution.

“The world is looking at us to make sure the shipment has moved,” he said. “I think the administration has made it clear that they expect a … reasonable outcome.”

Unionized dockers are also seeking a raise and arguing that shipping lines can afford it. With global demand, overseas shipping companies are seeing record profits.

Last month, Biden signed the Marine Shipping Reform Act — which aims to make ocean freight shipping cheaper — and criticized the concentration of corporate shipping in the hands of nine foreign-owned companies.

“Airlines generated $190 billion in profits in 2021, seven times higher than the previous year,” Biden said. “The cost has been passed, as you might imagine, directly to consumers, and attached to American families and businesses because they can.”

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