While details are scant, PMA and ILWU signal labor negotiations are ongoing

While a new labor agreement between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) has yet to be reached, the organizations said in a joint statement issued late last week are ongoing.

The ILWU represents port workers in California, Oregon, and Washington, with more than 30% of U.S. incoming container traffic moving through West Coast ports at the Ports of Los Angeles and Long Beach, according to industry estimates. The PMA represents shipping lines and terminal operators at 29 West Coast ports. And the contract, which expired on July 1, represents more than 22,000 dockworkers at all 30 U.S. West Coast ports. Negotiations began on May 10.

In the statement, PMA and ILWU said that “[T]alks are continuing on an ongoing basis until an agreement is reached,” and they “remain hopeful of reaching a deal soon.”

Going back to the middle of 2022, West Coast ports lost market share, due to the uncertainty of the timing of a new deal being reached, to East Coast and Gulf Coast ports, with shippers not wanting to have labor issues impact cargo flows.

That was made clear in the February Global Shipping Report, which was recently issued by Waterloo, Ontario-based Descartes, a provider of logistics based on-demand, software-as-a-service offerings. The report observed that volume share, for the top East Coast and West Coast ports, was relatively stable. And it explained that when comparing the top five West Coast ports to the top five East and Gulf Coast ports in January 2023 versus December 2022 shows that, of the total import container volume, the East and Gulf Coast ports declined slightly to 45.2% down 0.3% versus December 2022 and the West Coast ports increased in January to 38.6%, up 0.5% versus December 2022.  

Port of Los Angeles Executive Director Seroka said on a recent media conference call that the PMA and ILWU have made it clear they remain committed to getting a deal done and will not go on strike. And he commended President Biden for being the first president to visit with both sides and their top negotiators last June on the USS Iowa, encouraging the parties to stay at the bargaining table and work through their issues. He also credited the U.S. Department of Labor for its efforts to develop strong business relationships with both parties.

“We have not seen any change in productivity,” he said. “The rank and file that go out there every day…are on the job, moving all of the cargo they can through the port. That message needs to continue to get out as the ground truth to importers and exporters across the country. Yet, there still is trepidation. There are many transportation managers that could not go back to their boss for a third straight year and say ‘I got our cargo stuck in the jaws of congestion out in California.’ Maybe history will say there was some overcorrection here. The combination of that and the handwringing about the economy has got us turned a little bit sideways when it comes to the supply chain. We have got to get this collective bargaining agreement done…and focus on what we can do to deliver value.”

Seroka also explained that both the PMA and ILWU are keenly aware about West Coast cargo erosion to East Coast and Gulf Coast ports, with both parties wanting to work with West Coast ports to earn the lost volumes back and move forward with organic market growth.

“Collective bargaining is hard work,” he said. “Not only do we need a coastal framework but there are also 29 local agreements up and down the West Coast. And, by and large, these two sides have not negotiated in-depth for about a year. That work has to be done for the generation that is on the docks today and for the next generation of workers. Companies have to have certainty so they come back and invest and continue to drive business through this gateway. This deal may not be done in February or March, but I am confident we will see some real progress in the springtime. We don’t want to give anyone excuses to contract for cargo moving in other geographies or other ports. We have got to give confidence to these negotiators at the table to get the job done the right way.”

In late July, PMA and ILWU said they came to terms on a tentative agreement on terms for health benefits, adding that the tentative agreement is subject to agreement on the other issues in the negotiations.

“The parties have agreed not to discuss the terms of this tentative agreement as negotiations continue,” said ILWU and PMA officials in a statement. “Maintenance of health benefits (MOB) is an important part of the contract being negotiated between employers represented by the PMA and workers represented by the ILWU.” 

As previously noted in LM, this is not the first time a contract between the organizations gone on following the end of an existing contract. And one does not have to go too far back to see how acrimonious negotiations were, as in 2015, in the months prior to the June 30 deadline, it required the U.S. Federal Mediation and Conciliation Service to step in to help the sides find a way to come to an agreement over stalled labor negotiations. What’s more, the ongoing tension between the parties subsequently resulted in hindered productivity and also was a contributing factor in port congestion on the West Coast, especially as it led up to the 2016 holiday season.

The PMA said, at the time, that the state of terminal productivity at the five largest West Coast ports was approaching gridlock, due in large part to what it labeled ILWU-staged shutdowns.

In commentary provided to LM, Spencer Shute, Senior Consultant at Proxima, a Chicago-based strategic team of procurement specialists with more than 25 years of consultation and supply chain experience, said that with news from the resumed communications being limited, coupled with the Congress intervention in the rail negotiations late last year, it is expected that the port labor unions will dig into their positions even more.

“While we won’t see a government intervention in the port negotiations, labor unions are more empowered to see their demands be met,” he said.

Addressing the logistical challenges of spreading imports along the East Coast and Gulf Coast, Shute noted that the initial shifting of volume created backlogs and delays at various ports on the East and Gulf Coasts.

“As demand and volume has declined over the last two quarters, ports have regained balance,” he said. “Gulf and East Coast ports have worked to improve efficiency, thru-put, and implemented many enhancements to accommodate additional volumes. All of which has resulted in limited long-lasting challenges from the volume shifts. The shift in volume has also shifted other supply chain modes and network footprints, particularly along the East Coast. New York/New Jersey ports have surpassed Long Beach/LA in terms of overall volume. This has created a bigger need for drayage, yard space, and trucking capacity to accommodate the increased volume. Because the volume shift wasn’t immediate, and with sailing times increased, other logistics modes have been able to adjust and adapt with more success, which is why we haven’t heard of major, long-lasting impacts.”