Tentative agreement on new 6-year contract, subject to ratification

Negotiations on the West Coast port labor contract dragged on for months longer than expected, with tempers flaring along the way. Work disruptions began affecting ship schedules and container dwell times over the past two weeks. It now appears that more that significant fallout to the supply chain has been averted: A deal has been reached.

Late Wednesday night, the Pacific Maritime Association (PMA), representing the terminals, and the International Longshore and Warehouse Union (ILWU), representing workers, announced a tentative agreement on a new six-year contract.

No details were released and the agreement is still subject to ratification by both parties.

Acting Labor Secretary Julie Su had flown to San Francisco to meet with the parties on Monday and “played a key role” in the reaching the agreement, according to the ILWU and PMA.

PMA President James McKenna said the new contract agreement “recognizes the heroic efforts and personal sacrifices of the ILWU workforce in keeping our ports operating [during the pandemic and supply chain crisis].”

ILWU President Willie Adams said the union will now “turn our full attention back to the operation of the West Coast ports.”

Deal averts peak season disruptions

Reaching an agreement prior to peak season was crucial for all parties. Doing so avoided political fallout to the Biden administration from pre-holiday congestion headlines. The ILWU avoided reputational fallout from holding up Christmas cargoes to increase wages that were already relatively high. And the PMA averted losses to port productivity during peak season, which translates into more terminal profits.

Volumes to the West Coast have been seasonally rising, in line with pre-pandemic patterns. The Port of Los Angeles handled 409,150 twenty-foot equivalent units of imports in May, up 19% from April and up 64% from the recent low in March.

As of Monday, there were 58 container ships en route to the ports of Los Angeles and Long Beach from Asia, compared to 46 a month before and 47 two months prior.

Port of Los Angeles Executive Gene Seroka said his port is operating at about 70% of capacity. Of the 30% shortfall, he said half was due to macroeconomic issues and half was due to cargo switched to East Coast and Gulf Coast ports as a result of labor concerns at West Coast ports.

“If we can get a labor deal soon and the economy doesn’t falter, we’ll have a strong second half,” Seroka said on Tuesday.

They got the labor deal. Now it’s up to the economy.

Source from Freightwaves/by Greg Miller