U.S. Labor Secretary Thomas E. Perez is scheduled to meet Tuesday with West Coast longshore union and management negotiators in an effort to end a bargaining standoff that’s causing increasing pain across supply chains.
The White House said last week that President Obama was sending Perez to join the nine-month-old negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association. Neutral mediators from the Federal Mediation and Conciliation Service, an independent agency, have been involved since early January, when the ILWU and PMA invited them into into the talks.
Perez has no power to impose a settlement, but industry officials hope his involvement will encourage a settlement that eases West Coast port delays that have reached crisis levels and threatened to produce a management lockout of dockworkers.
The PMA has accused the ILWU of slowdowns, and halted vessel loading and unloading at West Coast ports last Thursday, and from Saturday through Monday rather than pay holiday and weekend premiums for poor productivity. The ILWU denies engaging in slowdowns and has accused the PMA of trying to pressure the union to accept a settlement.
Although yard and gate operations continued at terminals, the interruption in vessel operations caused ship backlogs to swell. Thirty-two ships, including 21 container ships, were backed up outside Los Angeles and Long Beach on Tuesday because of congestion, according to the Marine Exchange of Southern California. Ships also have been idled at Oakland and the Pacific Northwest ports of Seattle and Tacoma.
Delays at West Coast ports, which handle more than 40 percent of U.S. containerized imports, are causing increased disruptions to company supply chains in retail, manufacturing and wholesaling industries, as well as to agricultural exporters.
Supply chain managers have dealt with months-long delays by rerouting cargo, switching to more expensive air freight or drawing down stockpiles. Drewry’s Container Insight Weekly estimated that West Coast delays caused diversion of 150,000 twenty-foot-equivalent units in 2014. However, many companies say their bag of tricks for workarounds has been exhausted.
Honda said it will be forced to slow production at its U.S. auto assembly plants this week because of shortages of key parts. Retailers say late deliveries are raising costs and throwing their marketing plans into havoc, and suppliers say the port disruptions threaten them with permanent loss of business.