By Harry G. Butler, May 23, 2014, Journal of Commerce
The International Longshore and Warehouse Union is seeking a contract for just three years, according to Agriculture Transportation Coalition Executive Director Peter Friedmann, significantly shorter than shippers would like.
Issues at the center of the negotiations include jurisdiction and health care, and the latter figures into the length of the contract. The federal Affordable Health Care Act starting in 2018 will impose a so-called Cadillac tax on generous health care plans, such as those enjoyed by longshoremen on the West Coast, where employers pay 100 percent of the premiums and union members pay just a $1 co-pay per prescription for medicine. Friedmann said the union is looking for a shorter contract that does not address health care in the hope that Congress will take action before 2018 to remove the tax.
Employers, represented by the Pacific Maritime Association, want a minimum three-year contract, but would prefer a six-year contract to replace the six-year contract that expires at the end of June, CONECT reports. Retailers and other cargo interests also would prefer a longer contract because it would provide for a longer period of stability on the docks.
Negotiations between the union and the PMA began on a positive note on May 12, with the two parties issuing a joint statement saying they expect cargo to keep moving until an agreement is reached.
The current six-year contract expires at midnight June 30, and negotiators expect to meet daily in San Francisco until a contract is reached.
Friedmann said that each side has laid out their initial demands in writing, with a total of 36 pages for the two.
Trade groups, particularly retailers, have pressed the ILWU and PMA for an early conclusion to the negotiations, before the current contract expires, but that is unlikely. Still, PMA President Jim McKenna throughout the spring said an agreement would be reached by mid-July.
⇛ Complete coverage of the ILWU-PMA negotiations
The looming contract expiration and fears of disruption connected with it already seem to be prompting cargo diversions. Two-thirds of respondents to a JOC shipper survey last week said they plan to divert at least some cargo away from the West Coast to avoid potential problems, and import figures for April also indicate some acceleration of shipments to get ahead of the situation.