Bill Mongelluzzo, December 4, 2014, JOC.com
U.S. West Coast contract negotiations could go one of two ways when the International Longshore and Warehouse Union convenes a caucus in San Francisco in the week beginning Dec. 15.
If the ILWU leadership believes there is enough substance in what has been negotiated by then, it would seek authorization to sign a tentative contract that would then have to be approved in a vote by the rank and file in the ensuing weeks. Conversely, if the union’s leaders are not comfortable with what they have to present to the caucus, they would decide to return to the negotiating table with the Pacific Maritime Association.
That latter option could be devastating. With the Christmas holidays at hand, no significant progress in negotiations could be expected for the rest of the month. Extending the contract negotiations into 2015 would be extremely costly for shipping lines, terminal operators and especially the importers and exporters who depend upon the U.S.West Coast gateways.
Cargo interests represented by dozens of trade organizations have been clamoring for a quick resolution to the contract negotiations before the talks even began back in May. More recently, those groups have been calling for federal mediation to expedite an agreement. Since the government will usually call in a mediator only if the PMA and ILWU request one, the prospect of prolonged negotiations could force the hand of employers.
For example, the Agriculture Transportation Coalition hosted a meeting of Washington farmers and business leaders in Seattle to call for resolution of a contract and to highlight the economic impact ILWU slowdowns at the ports of Seattle and Tacoma are having on the state’s businesses and workers.
“Our 100-plus hourly workers are seeing up to a 40-percent reduction in hours from earlier this year,” said Blaine Calaway, vice president of sales, China, at Calaway Trading. “Calculating overtime, that means it could be upwards of a $150 loss a week per person,” he said.
Longshoremen up and down the West Coast, however, are not suffering due to the ILWU work slowdowns the PMA says have been underway at all of the major gateways since late October.
Man-hours paid to longshoremen in November were 26 percent higher than during November 2013, according to numbers posted on the PMA website for Los Angeles-Long Beach, which handles about 70 percent of the container volume that moves through the West Coast. However, total container volume year-to-date through the nation’s busiest port complex was up only 4 percent compared to last year, according to the PMA.
That means longshoremen have been receiving large paychecks while many employees at the hundreds of importing and exporting companies that ship through the West Coast have been hurting. According to the PMA annual report for 2013, the average annual earnings for a full-time Class “A” longshoreman who worked at least 2,000 hours last year were $137,253. The average earnings for an ILWU marine clerk who worked at least 2,000 hours were $154,842, while the average earnings for full-time ILWU foremen in 2013 were $213,120. The average earnings could be higher this year due to the extra hours being worked.
“The ILWU has its calendar and its slowdowns — all of which have created worsening economic conditions for people who make a living off cargo moving through the West Coast ports. In recent weeks, the ILWU has not demonstrated any urgency in reaching a fair and balanced agreement any time soon,” the PMA said.
Trade organizations representing importers, exporters and other businesses that make their livings through port activities say the ILWU has no sense of urgency to reach a contract settlement because longshoremen are profiting from the port congestion that they are in part responsible for. When a new contract is reached, if past is precedent, the wage increase in the new contract will be paid retroactively from the July 1 expiration of the old contract.
Shipping lines are incurring millions of dollars of losses due to port congestion and ILWU work slowdowns because their vessels are being thrown off schedule and are forced to wait at anchor for berths. A Port of Tacoma spokeswoman said international containerships are experiencing delays of 12-15 days upon reaching port.
The Marine Exchange of Southern California reported Wednesday morning that five containerships were waiting at anchor outside the ports. That was up from three container vessels at anchor on Tuesday.
The question that cargo interests are anxious to have answered is what outstanding issues remain after seven months of contract negotiations? The one point that the PMA and ILWU seem to have agreed upon is not to discuss the contents of the contract talks outside of the negotiations, so that question can not be answered at this time. The PMA and ILWU in late August issued a joint press release stating that a tentative agreement had been reached on medical benefits. That was assumed to be one of the most controversial contract issues entering into the negotiations.
Terminal operators can not continue indefinitely to pay 26 percent more in labor costs each week than they did in 2013 for handling only a 4 percent increase in cargo. Shippers of perishable agricultural products are suffering even more. AgTC members in the Pacific Northwest report that the port slowdowns have “left produce rotting and crippled their ability to fulfill contracts. They also told stories of having to lay off employees while reducing the hours of others right as the holiday season approaches,” AgTC stated in a press release Wednesday.
“These individuals are worried about how to keep food on the table and buy Christmas presents,” Calaway said.
The ILWU caucus is set to begin on Dec. 15 and could last up to a week, if necessary. Once a tentative agreement is reached, it could take several weeks to complete the voting process at the local ports.