Despite lack of contract, ILWU talks have been remarkably smooth — so far

 

Peter Tirschwell, July 27, 2014, JOC.com

On Tuesday, as August begins, it will be a month since the expiration of the six-year contract between West Coast dockworkers and waterfront employers. It has also been two weeks since the date Pacific Maritime Association president James McKenna predicted that a new contract would be in place, in remarks at TPM back in March.

 

Yet even though it now looks like it will be sometime in August before a new agreement is in place, no one is panicking and tensions appear low. Why? The reason is that McKenna in his TPM comments was true to his word in another, far more important sense. He predicted that cargo would flow unimpeded across the West Coast docks during the negotiations — in stark contrast to the last two contract negotiations, in 2002 and 2008. And so far, at least, that is exactly what’s happened.

 

To the degree there’s been any disruption of West Coast cargo movements during the contract talks between the PMA and the International Longshore and Warehouse Union — and it’s been minimal — it has not been directly connected to the negotiations. A brief flare-up at the TraPac terminal in Los Angeles on July 2 was tied to that terminal’s implementation of cargo-handling automation allowed under an earlier contract. Pickets erected by the Teamsters union in early July that some dockworkers initially refused to cross were tied to that union’s longtime effort to organize drayage drivers. A skirmish at the port of Portland, Oregon, on July 15 was tied to a longstanding ILWU dispute with ICTSI, the operator of the Portland container terminal, involving jurisdiction over the handling of reefer containers.

 

And finally, a bitter dispute over staffing at grain terminals in the Pacific Northwest that temporarily diverted the ILWU leadership from the negotiations is unrelated because the grain terminals aren’t represented by the PMA.

 

The reality is this: Despite the absence of a contract, 2014 has been been — so far — the smoothest ILWU-PMA negotiation in recent memory. Far more so than in 2008, when the PMA was forced to issue numerous statements between May and late July when the contract was signed, criticizing the union for strikes, slowdowns, and other tactics that impacted cargo movements up and down the coast. And obviously more so than in 2002, when the entire coast was shut down for 10 days in a management-led lockout that followed extensive disruptions that employers felt were in violation of the then-existing contract.

 

In particular, the current negotiation stands in stark contrast to how events unfolded in 2008, the most recent negotiation. In the heat of negotiations on July 16, 2008, some two weeks after the existing agreement had expired, the PMA said: “ILWU members in Southern California have expanded disruptive job actions at terminals at the twin ports of Los Angeles and Long Beach, leading to widening productivity losses…Overall, productivity at the port complex was down 20 to 30 percent during the day shift on Tuesday (July 16).”

 

On July 25, 2008, the PMA said, “Continuing disruptive labor actions by the International Longshore and Warehouse Union (ILWU) at the ports of Los Angeles and Long Beach are entering their third week and are now rolling to the Port of Oakland.”

 

Image of July 18, 2014, ILWU-PMA joint press releaseThe July 18, 2014, joint press release by the ILWU and PMA again stressed that the two parties had pledged to keep cargo moving. Read more.

Such disruption has been completely absent this year. In fact, unlike in 2008, the PMA independently or the PMA and the ILWU in joint statements repeatedly have pledged to keep cargo moving (on May 12, July 1, July 11, and July 18). McKenna in his TPM remarks in March predicted cargo would keep flowing. Also in contrast to 2008, when the PMA made its own announcements as to the status of negotiations and pointing out instances of disruption, this time the announcements have been made jointly, almost every one containing the line, “both parties have pledged to keep cargo moving.”

 

 

 

Furthermore, in 2008, when the ILWU refused to extend the contract, the PMA was openly disappointed, saying “we regret that (the union) did not agree to a formal extension of the contract and its no strike clause.” This year there was also no extension on July 1, but the tone was unmistakably different. On July 1, the PMA and ILWU stated jointly, “While there will be no contract extension, cargo will keep moving, and normal operations will continue at the ports until an agreement can be reached.”

 

The absence of disruption and lack of a contract nearly a month after the expiration of the previous one is leading some to take a low-key view of what is happening now.

 

“We’re happy to see the joint press releases with the commitment to keep cargo flowing,” Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation, told JOC.com. “However, the continued uncertainty is still weighing on many importers and exporters. They’d rather have the certainty of a new contract in place. We hope the parties will be able to conclude the negotiations within the next several weeks.”

 

The virtual absence of disruption, should it continue through the signing of a new agreement, suggests that many shippers overreacted by diverting cargo to the East Coast or Canada or accelerating cargo movements to miss the negotiations, incurring higher inventory costs in the process. That may be understandable given how 2008 played out and especially after the numerous threats of a strike on the East Coast in 2012-13. Also, longshore union negotiations are by definition highly unpredictable. Thus as smoothly as the talks have gone up to this point, things could still deteriorate.

 

Two-thirds of shippers who participated in a JOC survey in mid-May said they planned to divert at least some cargo away from U.S. West Coast ports to avoid disruption that could emerge from the negotiations between. Roughly a third of shippers surveyed in late June by the investment research firm Wolfe Research said they accelerated imports into U.S. West Coast ports and built up additional inventory to protect against disruption tied to the negotiations. The results can be seen in higher volumes at East Coast ports and at Vancouver, British Columbia.

 

Why there has been no disruption tied to the contract talks is less clear. ILWU members have traditionally been more concerned about their own wages and benefits than the competitive standing of West Coast ports. Whether that attitude has changed is uncertain. McKenna early on in the negotiations said “West Coast ports have lost significant market share in recent years, and face renewed competition from Canada, Mexico, the Panama Canal and other domestic ports.” Thus competitive threats were front and center this year, more so than in prior negotiations when West Coast ports had a tighter grip on cargo coming from Asia. How much of an impact that factor had, if any, will only become clear well after negotiations have concluded.

 

 

 

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