A contract between the shipping companies and 22,000 West Coast dockworkers expired over the weekend. But the two sides kept talking and said they wanted to avoid a strike that could wreak havoc on an economy already stressed by soaring inflation and supply chain issues.
The contract that expired last Friday covered port workers from California to Washington state who handle nearly 40% of US imports.
“Although there is no contract extension, cargo will continue to move and normal operations will continue at ports until an agreement is reached,” a joint statement from the Pacific said. Maritime Association and the International Longshore and Warehouse Union.
The ILWU is the union representing Pacific dockworkers, and the Pacific Maritime Association is a trade group for freight carriers and terminal operators. Its members include global shipping giants such as Maersk and Evergreen Marine.
The talks are so crucial that President Joe Biden even stepped in last month and met with both sides in Los Angeles. They are taking place against a backdrop of soaring imports that have left backlogs of ships anchored offshore and falling exports.
Both sides said last month they expected no labor disruptions, but US industries are clearly worried.
In a letter to Biden released hours before the latest contract expired, about 150 trade groups ranging from truckers to the agricultural, chemical and toy industries urged the administration to work with both parties to extend the current contract, negotiate new good faith and agree to avoid actions. which further disturb the ports.
The letter pointed out that the groups were entering their peak season for imports as retailers stocked up on fall holiday merchandise and back-to-school items.
“We continue to expect freight flows to remain at record levels, which will put additional pressure on the supply chain and increase inflation,” the letter said. “Many expect these challenges to continue throughout the year.”
The automation of port facilities is a major issue of the talks. The union says it will cost jobs for crane operators and other workers, who can earn $100,000 or more a year. The Pacific Maritime Association argues that automation will actually increase employment by allowing ports to move more cargo.
Ports are already struggling to handle container traffic, much of it from Asia, where ports are heavily automated.
After the COVID-19 pandemic started to take hold in 2020, cargo traffic to ports dropped drastically. But then he recovered and has been booming ever since. Soaring demand has led to traffic jams in the twin ports of Los Angeles and Long Beach, which in 2021 alone moved some 20 million cargo containers. The ports, collectively known as the San Pedro Bay Port Complex, alone handle more than 30% of containerized imports and exports by waterway in the United States.
In January, about 100 ships were waiting to enter the port complex, but that total has now dropped to 60, and even 20 at times, Port of Long Beach Executive Director Mario Cordero said Tuesday.
Cargo is loaded and unloaded 16 hours a day, on average, Cordero said. However, ports must have a “24/7 mindset” to handle Asian traffic, where ports operate 24 hours a day, he said.
Contracts are renegotiated every six years, and Cordero said most have been completed without interruption.
However, a lockout in 2002 and an eight-day strike in 2015 cost the US economy billions of dollars and forced the administrations of then-presidents George W. Bush and Barack Obama to intervene.
Cordero said he hasn’t seen any slowdown in work at the port and is optimistic the ongoing negotiations will end with a fairly quick resolution.
“The world is watching us to make sure we move the cargo,” he said. “I think the administration has made it clear that they expect a reasonable outcome.”
Unionized dockworkers are also demanding a raise and argue that shipping companies can afford it. With global demand, overseas freight companies are making record profits.
Last month, Biden signed the Ocean Shipping Reform Act — intended to make shipping goods across oceans cheaper — and blasted the concentration of shipping in the hands of nine foreign companies.
“These carriers made $190 billion in profits in 2021, seven times more than the year before,” Biden said. “The cost was passed on, as you might guess, directly to consumers, pasting it onto American families and businesses because they could.”