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News May 25, 2022

West Coast Port Worker Contract Talks Have Reportedly Been Suspended

The talks, which have potential to significantly impact global supply chains in the promo products industry and beyond if they go awry, will reportedly resume June 1.

By  Christopher Ruvo

Negotiations centered on establishing a new contract for unionized longshoremen and warehouse workers at 29 critical West Coast ports have reportedly stalled.

The talks are a concern for importers in the promotional products market and many other industries. Potential contentiousness that escalates to work stoppages or slowdowns at the ports – which have happened during past negotiations – could significantly exacerbate global supply chain challenges that have already resulted in ills like inventory shortages in promo. Further inflation could also be fueled.

shipping port

While no stoppages or slowdowns have been reported yet, the Journal of Commerce (JOC) revealed this week that negotiations have been temporarily suspended until June 1.

JOC reported that the International Longshore and Warehouse Union (ILWU) wanted to halt talks, with a source telling the Journal that little progress has been made on negotiations since they started May 10.

JOC also reported that individual committee meetings on specific issues related to the broader contract negotiations, such as worker safety, were continuing.

ILWU represents 22,000 dockworkers who labor at West Coast ports. Those include the ports of Los Angeles and Long Beach, through which about 40% of cargo containers imported to the U.S. flow. The union is in negotiations with Pacific Maritime Association (PMA), which represents 70 employers that include ocean carriers and marine terminal operators.

Automation of certain port operations, which the PMA wants to increase and which ILWU views as a threat to jobs, figures to be a point of contention.

Port officials have said they expect negotiations to continue past the contract end date of July 1, but have so far maintained that they do not foresee work stoppages or slowdowns. Mario Cordero, executive director of the Port of Long Beach, said he believes the talks could conclude amicably a month or two after the current contract expires.

“I have confidence that the two parties know what’s at stake here,” said Cordero. “They will resolve their differences within a reasonable time.”

Certainly importers in the promo products space are hoping that’s the case.

“Any significant slowdowns or stoppages would have a very significant impact on our ability to import product and maintain inventory,” Jeremy Lott, a member of Counselor’s Power 50 list of the industry’s most influential people and CEO of Issaquah, WA-based SanMar (asi/84863), promo’s largest supplier, recently told ASI Media.

“While we use ports on the West Coast, the Gulf and the East Coast,” Lott continued, “the West Coast ports are incredibly important to Trans-Pacific trade and would have a significant impact to our business and the industry in general.”

Supply chain experts in promo have also said that slowdowns or stoppages could lead to backups at other domestic ports as importers scramble to reroute shipments. There’s also concern other workers in the port and transportation supply chain could slow down service in solidarity with ILWU, should talks take a nasty turn.

The contract talks come as port congestion, while down from heights seen last year, continues to slow the movement of goods into and out of the U.S. CNBC has debuted a heat map that tracks congestion at ports. Domestically, the California ports of Oakland and Los Angeles are experiencing the worst congestion, the heat map showed.

“Today, rail boxes are waiting more than six days to get on a train,” Gene Seroka, Port of Los Angeles executive director, told CNBC. “That’s triple the dwell time compared to pre-pandemic days. Rail volume is up six-fold since February. We need more rail assets in place at America’s busiest port complex. It’s important that all stakeholders redouble efforts to maximize rail cargo off our docks and into the domestic economy.”