News / TPM22: Importers plea for early west coast labour contract talks, as uncertainty bites

Source POLA

US importers are getting antsy over the looming contract negotiations at west coast ports.

In a letter to the heads of the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA), the chief of the National Retail Federation (NRF) urged both sides to commence negotiations as soon as possible and commit to constructive dialogue until a new contract is agreed.

In a similar vein, the Retail Leaders Industry Association has written to President Biden, asking the White House to engage in the upcoming labour negotiations.

Comprising some 49 shippers fearing further disruption to freight movement in the key ports of Los Angeles and Long Beach, the association has requested the Biden administration oversee the contract negotiations between employers and unions.

The current labour contract between the ILWU, which represents nearly 14,000 port workers in California, Oregon and Washington State, and the PMA, on behalf of shipping lines and terminal operators at 29 west coast ports, is due to expire at the end of June. Talks traditionally begin in May for the 1 July deadline.

The negotiations are awaited with apprehension. Several recent rounds turned acrimonious, with painful repercussions for beneficial cargo owners. In 2015, during the previous negotiations, federal mediators had to step in to end four months of work slowdowns that brought gridlock.

Now, NRF president & CEO Matthew Shay has written to ILWU president William Adams and PMA chairman & CEO James McKenna urging them to begin contract negotiations as soon as possible.

He told them: “As many expect supply chain disruptions to continue through 2022, contract negotiations should not lead to additional pressures.

“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. Both parties should attempt to reach a contract well before expiration for the benefit of the national economy and to provide the needed certainty to all the stakeholders in the supply chain that rely on the US west coast ports.”

Even a perceived risk of disruption would force retailers to reconsider their use of west coast ports, warned Mr Shay. “Without a clear commitment to keep negotiating, cargo shifts to other gateways would likely happen, even if a disruption never occurs, simply due to the need to mitigate the risk of disruption.”

According to the Retail Leaders Industry: “The uncertainty is already affecting operations on the ground. Importers and exporters, wary of further disruption are already adjusting freight strategies to avoid or mitigate potential impacts to keep goods moving, as they have throughout the pandemic. These adjustments are influencing volumes and market share, with the contract expiration just months away.”

Meanwhile, today the PMA appears more sanguine about the negotiations, praising dockers for their response to the Covid pandemic challenges.

Focus for the negotiations is expected to be around a number of key issues, including port safety, benefits, which would include wages, will also be an issue, but the major sticking point is expected to be discussions over port automation.

In a debate last summer over congestion and port productivity, both sides dismissed arguments blaming lack of automation and low productivity for the problems, arguing they were the result of an overloaded supply chain.

The PMA sought to postpone a clash over automation last November by proposing a one-year extension of the current contract, but the ILWU turned it down, saying it preferred proper contract talks. Given the vast profits shipping lines have raked in, the union likely sees a good chance to gain some meaningful concessions.

Mr Adams dismissed worries that contract talks were “tantamount to harbingers of doom”, arguing that they had delivered strong profits to operators and well-paying jobs for workers. He said people should view them as “fundamental to the well being of our ports, rather than prognosticating disaster”.

Meanwhile, forwarders and carriers are following developments warily.

“This is definitely something we’re watching closely,” said Bob Imbirani, EVP international of Team Worldwide, which has already taken steps to limit some traffic through west coast ports. And Vincent Clerc, head of logistics at AP Møller-Maersk, expects negotiations to be a “bumpy process”.

“I hope for swift resolution, but some of the issues will take some time to settle between the parties,” he said during the TPM22 conference on Monday. He advised customers to “hope for the best, but also have a plan for the worst”.

Maersk had upped capacity to ports on the US east coast and Gulf of Mexico in preparation for the negotiations, he added.