With the expiration of the labor contract among west coast dockworkers and the Pacific Maritime Association (PMA) expiring of July 1, labor contract talks appear to be continuing with no significant port disruptions. From all the various media reports that we have been monitoring, the situation is described as uncertain but hopeful that port operations will continue during extended contract negotiations.

Both parties issued a joint press release earlier this week indicating that 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 between both sides.

There are high stakes on both sides, both labor union and port operators. The International Longshore Warehouse Union (ILWU) has raised issues related to health and pension benefits, work jurisdictions and facility automation and technology deployment concerns. Meanwhile the port operators remain concerned about increased competition from Canada, Mexico. Gulf and East Coast ports along with needs to increase overall efficiencies and automation levels, particularly concerning the newer mega container ships that have entering or plan to enter service.

On the one hand, shippers can be a bit more hopeful that west coast ports will remain open, at least for now.  With the critical Fall and back-to-school as well as holiday merchandise inbound inventory movements about to surge in next 2-3 months, this uncertain period will add to concerns for reliable shipping scheduling and the need to perhaps augment critical safety stocks. Labor negotiations could drag on for several more weeks. There may be considerations for re-routing container traffic to other than PMA ports, and decision planning periods are fast approaching.

Bob Ferrari