As the hours wane on the current contract between terminal operators and longshoremen on the U.S. West Coast, most shippers are taking the silence from both parties as a sign that negotiations are going well and will result in little disruption.
The contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expires at 5 p.m. today, and, for the most part, the month-long negotiations have resulted in little public comment from either side. Aside from minor congestion at West Coast ports — which can largely be explained by beneficial cargo owners bringing in shipments ahead of potential negotiation breakdowns — there have been no reports of any disruptions or slowdowns thus far.
“I would say it’s a good sign,” Jonathan Gold, vice president for customs and supply chain at the National Retail Federation, said today. The NRF has been outspoken on its hope for a quick resolution to the negotiations. “They’ve remained at the negotiation table. Obviously, at this point there most likely won’t be a contract. But we still are hoping for a quick resolution.”
This year’s contract negotiations mark the end of a six-year contract between the Pacific Maritime Association and the ILWU. Negotiations of the last two contracts did not go smoothly, with one ending in a 10-day employers’ lockout at West Coast ports. With the current contract deadline today, shippers are hoping for quick resolutions.
Most BCOs have already enacted contingency plans, either shipping early to avoid disruptions related to the contract talks, or shipping cargoes through other ports in Canada or on the U.S. East Coast. Disruption in supply chains is never welcomed, said Marianne Rowden, president and CEO of the American Association of Exporters and Importers.
“So far, though, I haven’t gotten any emergency or panicked calls from our members,” Rowden said. “Carriers have the capacity to deal with it in the short term, but the longer the negotiations go, the harder it will be to deal with for everyone involved.”
In 2002, jawing began months before the two parties even sat down to negotiate. The biggest issue in those negotiations was the computerization of port operations, which impacted marine clerks as well as other port employees. By the end of the contract, on July 1, 2002, there was no agreement.
Negotiations in 2008 were less eventful, but were bogged down by the then-controversial topic of automated cargo handling. Despite beginning early — the PMA and ILWU sat down at the table in mid-March 2008 — the negotiators missed the deadline yet again. Although this time there was no lockout, there were reports of slowdowns until a new pact was agreed to in August.
This year, the negotiating topics aren’t quite as controversial, save one large elephant in the room: who will pay for an estimated $150 million per year Obamacare tax on the union’s premium health care plan. The ILWU was also concerned about jurisdictional disputes with unions such as the International Association of Machinists and the International Brotherhood of Electrical Workers, which compete for some port jobs.
At the JOC’s annual TPM Conference in March, PMA President James McKenna said negotiations may include a shorter, three-year contract instead of one of six years. The health care tax doesn’t kick in until 2018, and a shorter contract would leave that topic on the table for another negotiations team.
“I think I look at it like the longer the contract, the better,” Rowden said. “The longer the contract, the more stability shippers have in the long run.”