West Coast Dock Operations to Continue as Parties Plan to Extend Contract Talks

This story appears in the June 30 print edition of Transport Topics.

West Coast port negotiations apparently will stretch beyond the scheduled June 30 contract expiration, with operations expected to  continue without interruptions, officials said. (UPDATE, July 1: Talks and operations are continuing.)

“Negotiations are continuing and will likely continue into mid-July,” Wade Gates, a spokesman for the Pacific Maritime Association, told Transport Topics on June 26.

The group represents ocean carriers and terminal operators in negotiations with the International Longshore and Warehouse Union. Its members work at 29 ports, including Los Angeles and Long Beach, California, the two largest in the United States.

There was no announcement formally extending the talks.

“Negotiators met last week, yesterday and today,” Craig Merrilees, a spokesman for the union, told TT on June 26. “Historically, it has taken a bit longer than the contract expiration to get the agreements done, but they do get done. This time will be no exception.”

The current six-year contract was reached in 2008 after scattered disruptions, including a one-day strike and multiple work slowdowns.

In 2002, the ports were shut for 10 days, leaving cargo stuck on the docks and hundreds of ships stranded at sea, waiting to unload. Terminals didn’t reopen until President George W. Bush invoked federal back-to-work labor law.

The specter of a disruption led the National Association of Manufacturers and the National Retail Federation to issue a report on June 26 that gauged economic disruption from a five-day shutdown at $1.9 billion daily, and a 0.3 percentage point drop in GDP from a 20-day stoppage.

“The ILWU and the PMA must remain at the negotiating table without engaging in disruptions because the economic consequences of an intractable and prolonged dispute are too severe to ignore,” the report said.

Concerns about the impact of disruptions extended well beyond retailers and manufacturers, which have been vocal in their fears as the contract deadline approached.

“We are watching the situation with concern,” said Joe Schuele, a spokesman for the U.S. Meat Export Federation, which represents companies that ship beef and pork overseas as well as to Canada and Mexico. “We are hopeful there won’t be a disruption. We are hopeful there will be an extension.”

Both sides haven’t commented on detailed issues, though industry observers have said health care and chassis maintenance are under discussion.

Management has said it’s seeking unspecified steps to help restore slipping West Coast container cargo market share in advance of the Panama Canal expansion next year. West Coast port workers on average make about $150,000 annually, excluding benefits.

The situation affects exporters more immediately than importers because they have to make shipping decisions a few days before their goods reach a port by truck. Because imports from Asia typically take three weeks or more to reach West Coast warehouses, cargo routing decisions have to be made further in advance.

Last year’s pork and beef exports totaled 3.31 million tons. That’s the equivalent of about 160,000 container loads.

In 2013, meat was the third-largest U.S. export commodity by weight, behind dairy and food products, according to a study done for the manufacturers and retailers by economic consultant Inforum.

Meat exports through West Coast ports account for about 40% of the federation’s business, Schuele said. The balance is moved overland to Canada and Mexico and through other U.S. ports, he said.

“Our members don’t have a lot of options for products that are being processed in the West,” Schuele said June 25.

Meat processed elsewhere can be shipped by truck to ports on the East and Gulf coasts, but that route is longer and slower, he said.

He said exporters have made contingency plans this year, which are similar to actions taken in advance of a contract signed in 2013 between the International Longshoremen’s Association and the U.S. Maritime Alliance, negotiating for port users in the East and Gulf coast regions.

Shippers aren’t the only ones making preparations. U.S. Customs and Border Protection last week issued a series of guidelines to shippers, truckers and other port users in the event of a disruption.