A ship docked at a port of Los Angeles.

MONEY & BUSINESS: US companies have West Coast labor talks amid supply-chain crisis

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US companies fear a repeat of last summer’s supply-chain chaos – that left store shelves empty and fueled higher prices – as contract negotiations between longshoreman and operators of the nation’s largest ports remain adrift.

The contract between some 22,000 dockworkers at 29 ports along the West Coast –  represented by the International Longshore & Warehouse Union (ILWU) – and the Pacific Maritime Association, composed of ocean carriers and port operators, expires at the end of this month.

“The entire industry is on pins and needles,” said one manufacturer who ships goods to the West Coast from China. “This is a looming crisis and we’re hearing and reading nothing about any real progress on this and no messaging from the White House.”

After several weeks of negotiations, the ILWU temporarily halted the talks from May 20 to June 1 without disclosing a reason for the break, according to a Journal of Commerce report.

One of the hot-button issues in the contract talks is whether to install new technology to automate some functions. The union is opposed, fearing more automation will eliminate jobs. Port operators are pushing for the change to increase efficiency. 

The West Coast union contract expires on July 1 and the talks were already suspended in May for two weeks.
AP

“Automation does two things: it makes the companies rich and the longshoremen unemployed,” said Harold Daggett, the head of the International Longshoremen’s Association – which is not part of the ILWU negotiations.

Daggett’s fiery speech posted on YouTube on May 13 added to the anxiety that ships will start to pile up again in the Pacific Ocean.

“Make no mistake about it, automation doesn’t improve productivity. It destroys lives and livelihoods. And we will stand with the ILWU to fight tooth and nail,” Daggett, who represents 65,000 dock workers along the East and Gulf coasts, railed in the seven-minute. 

The Port of Long Beach declined to comment for this story. The executive director for the port of Los Angeles, Gene Seroka, did not respond for comment. Together those ports represent more than 40% of the container traffic into the US.

ILWU President Willie Adams declined to comment citing an agreement with the PMA not to discuss the negotiations with the press.

Before the talks began, Seroka produced a 22-minute video with Adams in which the men, sitting together by the water in April, presented a collegial image of two power brokers who know each other well and are friendly.

“We will sit down and get an agreement,” Adams promised on the April 13 video. 

Seroka added: “As we go through these negotiations, it’s seasoned professionals who are at the negotiating table. These people know what to do.”

Neither side has tipped its hand about how the talks are progressing – and the two-week halt after Daggett’s fiery rhetoric is not reassuring, industry experts said. 

If they don’t reach an agreement within the next three weeks, companies fear that work stoppages or slowdowns could start up as they did in previous negotiations. 

Daggett’s saber-rattling is “meant to mobilize not just his membership but other organizations to have a collective voice on this topic so they’ll have a broader impact,” said a logistics consultant who did not want to be identified, because the issues are politically charged. 

Harold Daggett seated in his office.
Harold Daggett is president of the International Longshoremen’s Association.
International Longshoremen’s As

The seeming impasse comes as US companies are bracing for a surge in shipments from China as the world’s second largest economy eases its COVID-related lockdowns. 

In May, Chinese exports rose by 17% compared with a year ago, more than doubling the 8% spike economists had expected, and far exceeding the 4% annual pace in April, according to a Wall Street Journal report.

The ports of Long Beach and Los Angeles are ranked last on the 2021 World Bank’s Container Port Performance Index, at 369 and 370, respectively. 

There are only three ports along the West Coast that are partially automated, including the Long Beach Container terminal. 

In the last contract, ILWU agreed to allow employers to install some automation at the ports. But now it seems that the union may be reconsidering those concessions, despite the fact that the automated terminals allow trucks to move cargo in and out of the terminals more quickly, according to a Journal of Commerce report.

President Biden visited the Port of Los Angeles on Friday to discuss the economy and blamed greedy shipping companies for contributing to runaway inflation.

He pointed the finger at nine foreign-owned freight carriers that transport goods between Asia and the US that raised their prices by 1,000%, resulting in $190 billion in profits last year.

Congress, the president said, will “crack down” on these companies.

“The great ripoff is over,” he added.

But US importers are hoping the White House intervenes more immediately in the labor negotiations to thwart another slowdown of the supply chain.

In the meantime, more ships are avoiding the West Coast ports in favor of the East Coast — a practice that began in 2021 when the Pacific turned into a parking lot of container ships. The trend may continue as carriers hedge their bets on the negotiations, supply chain analyst Larry Gross told The Post.

Gross speculated that one of the holdups in the talks now is that the ILWU may be trying to take back some of the concessions regarding automation that it agreed to in previous contracts.

“I haven’t seen any real signs of progress,” Gross said. “They were going to talk every day.”

During nearly every other contract negotiation on the West Coast there has been work slowdowns.

“I doubt we’ll see a harmonious period of thoughtful discussion once the official contract expires in three weeks,” said the manufacturer. “Ain’t going to happen. Things are going to break down quickly with hundreds of ships now being reloaded in China headed back this way with goods for the back half of the year.”



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