Supply Chain Matters highlights the occurrence of multi-day disruptions occurring among key U.S. West Coast ports as a result of new job actions among frustrated dockworkers, as labor contract negotiations become tense.
The most significant news in global transportation and logistics circles late last week and this week are U.S. West Coast dockworkers incurring job actions that are hindering container ship unloading among various port terminals.
Labor contract renewal negotiations among the labor unions representing U.S. West Coast dock workers and the Pacific Maritime Association having dragged on since June 2022. Business media reports had indicated in early May that progress was made on issues related to health benefits and other items including areas of automation, with a labor agreement in view for this month.
But shipping industry sources now indicate that negotiations deteriorated last week over the scope of expected dockworker wage increases.
Intermittent work disruptions and consequent actions limiting unloading of containers reportedly began starting on Thursday of last week and have extended to this week. The actions reportedly involve job bosses refusing to dispatch dockworkers to specific marine terminals, a slowdown of operations and various refusal to work because of health and safety concerns.
Reportedly, one terminal at the Port of Los Angeles cancelled cargo movement operations on Monday of this week while two terminals at the Post of Long Beach closed. Other actions occurred last week including a reported labor shortage at the Port of Oakland’s international terminals on Friday of last week. Bloomberg reported similar disruptions observed in ports in Tacoma and Seattle.
End to end logistics visibility technology provider projet44 provided Supply Chain Matters the below chart depicting median import and export dwell times for the Port of Los Angeles that depicts the actual daily impacts.
According to reporting from The Wall Street Journal, people familiar with ongoing contract negotiations indicated there was “a substantial gap between the union’s demands and what employers are willing to pay and that rising frustration on both sides is impeding progress.”
Both sides are pointing the finger at each other regarding the ongoing disruptions, which is not an optimistic sign of progress. The existing labor contract expired on July 1, 2022.
Somewhat familiar in these events from past history, both the National Retail Federation and the National Association of Manufacturers have asked the Biden Administration to push the parties toward a timely resolution.
White House Press Secretary Jean-Pierre indicated to reporters yesterday that “the administration encourages all parties to work in good faith toward a mutually beneficial resolution.” According to the WSJ report, acting U.S. Labor Secretary Julie Su spoke to both negotiating parties on Friday with a department spokesperson indicating that the department is in close contact with the parties, “who assure us that they continue to work towards a deal.”
Implications
The termed second-half peak shipping season traditionally begins at this point in the calendar year and continues into November. Based on the history of prior contentious labor contract negotiations involving 29 U.S. Coast Port terminal operators represented by the Pacific Maritime Association and the International Longshoreman and Warehouse Union (ILWU), union workers have previously enacted cargo movement disruptions to garner negotiation leverage.
The Wall Street Journal indicated in May an atmosphere of rising tensions between companies and workers. “Dockworkers, truckers, rail and warehouse workers in Europe, Asia, and the U.S. have flexed their muscles over the past year, staging walkouts and other actions that have shut down cargo flows and prompted government intervention.”
Further, as we indicated in a prior commentary, the U.S. freight and logistics sector in in a condition of contractionary recession, that adds to demands for higher worker compensation.
A further backdrop has been the billions of windfall profits that global shipping lines benefitted from during the pandemic induced global transportation disruptions of 2020 through 2022. Some shipping lines have since rewarded operational employees and executives with bonuses and added wages.
Because of this backdrop, many importers made plans to transit their imports towards various U.S. Gulf or U.S. East Coast Ports during the negotiation period. That should have been a good contingency plan albeit the new consequences of severe drought occurring in South America which has impacted the water levels of the Panama Canal resulting in increasingly slower transit times.
For our supply chain management community readers, the situation is shaping up to be a potential new global disruption to manage. So, what else is new?
Bob Ferrari
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