For over a year the United States has been witnessing crippling supply chain gridlock caused by unprecedented demand by consumers and the lack of capacity in most posts to handle the ever-increasing vessels calling at the ports. The situation is particularly alarming on the west coast. At one point during the November-December period of 2021, there were more than a hundred vessels waiting to dock at the Port of Los Angeles/Long Beach complex. These sister ports are the busiest in the country, handling approximately 40% of all imports into the United States. These days, the concern is shifting from the gridlock to the looming west coast dockworkers’ contract with the terminal operators that are set to expire on June 30, 2021. The dockworkers are represented by the International Longshore and Warehouse Union (ILWA) and the terminal operators are represented by the Pacific Maritime Association (PMA). More than half of the calls fielded by AIT within the past three weeks have been from importers eager to know if there will be a slowdown or lockout as we approach the June 30th deadline. Importers are increasingly asking if they should reroute their cargo through gulf-coast and Canadian ports to avoid any potential fallouts from the impending collective bargaining talks.
WHY THERE IS CONCERN
If the history of labor contract extension over the past two decades is anything to go by, importers have good reasons to be concerned. The agreements in 2002, 2008, 2014, and 2017 came with major changes that informed subsequent negotiations. The 2002 agreement led to the introduction of computer technology. Although this technology had a limited effect on the dockworkers, the marine clerks were not so fortunate. The efficiencies that came with this technology led to a significant reduction in their workforce. An estimated 40% of the marine clerk’s positions were shelved. The 2008 agreement ushered in automation at an unprecedented level, from ship to crane and unmanned transportation, and automated crane stacking. The leveraging of this technology eliminated about 50% of the ILWU workforce and forever changed the ILWU tactics on technology implementation. The 2008 negotiations were less contentious than in 2002 even though the deadline for a new contract was missed. The work slowdowns were timid and a new contract was eventually ratified in August of 2008. When it came time for the 2014 talks, the bruises from the 2002 and 2008 negotiations were still fresh. Both sides didn’t have the appetite for another grueling negotiation, so the contract renewal was somewhat smooth.
As both sides prepare to begin extension talks on May 12 in San Francisco, there will be pressure to bring down cargo handling costs, and meet clean air mandates by the terminal operators. Port operators will also look to implement additional technology and automation that will increase productivity. The dockworkers, for their part, will likely bargain for increased wages, citing the record profits hauled in by the carriers in 2021. The ILWA will also bargain to limit the introduction of new technology that will see a reduction in their workforce.
Each side will enter the negotiations with specific demands. The dockworkers will need assurances that their benefits—medical, wages, and work hours are protected. The ILWA wants to extend its jurisdiction to include nontraditional members such as electricians and machinists. The ILWU does not have any appetite for new technology that will lead to a reduction of its workforce and may push to include clauses that protect layoffs. The PMA will seek to accelerate automation from dock to shore. This has been the sticking point for the past three agreements. The PMA knows it needs to accelerate automation to reduce its cost and become competitive with the east coast and golf state ports. In essence, it is trying to maintain or increase its market share. And the only way to do this is to modernize.
These PMA-ILWA should view its relationship with the ILWA as a stakeholder relationship, and not an adversarial one. The terminal operators should build relations that help train and prepare dockworkers for the skills that will be needed for an automated port. Some of these skill positions are filled by machinists and electricians who are represented by the machinists and electrical unions. An understanding between the unions to train some ILWU members for the highly skilled jobs that may be needed in the future may blunt some of the effects and potential layoff concerns the union may have about the acceleration of automation of the marine terminals.
Most ports are managed by the city. However, the pandemic showed the important role our ports hold in notational and health security. It may be time for the States or the federal government to examine the role of our cities as the main oversight entity for our ports.
Terminal operations should be reexamined. For example, the major ports should be operational for container pick up and drop-offs twenty-four (24) hours a day. This will definitely reduce congestion and the ills that come with it. Also, while automation is slowly implemented, both sides may consider carve-outs for non-union workers to perform tasks that are not in direct competition with traditional union functions.
There should be off-dock infrastructure investment such as rail connecting the dock to off-site loading and unloading terminals. The city may also lessen some of its regulations regarding the vertical stacking of containers off-dock. This will reduce the number of containers that have to be stored at the terminal because they cannot be stored off the dock. The City of Long Beach has updated its ordinance on vertical stacking as a direct response to this problem.
As with any negotiations, both sides may have to compromise. The PMA knows it needs to modernize its operations by leveraging automation. The dockworkers also know the status quo is not good for their continued existence. The west coast ports are increasingly losing market share to the east coast, Canadian, and golf state ports. Most carriers that use to call at the Port of Los Angeles/Long Beach for their containers going to the Midwest are increasingly choosing Vancouver, BC. The long-term solutions will require both sides to be forward-looking, and understand our ports need to modernize and innovate to remain relevant.