A completely revamped arbitration system in the new longshore contract will significantly reduce the productivity-busting work slowdowns that have plagued West Coast ports since the previous contract in 2008, and will pave the way for terminal automation in the years ahead, according to Pacific Maritime Association President James McKenna.
In an introductory letter to the 72-page PMA 2014 Annual Report, McKenna described how the 2002 International Longshore and Warehouse Union contract enabled employers to introduce computer technology at marine terminals, and the 2008 contract ensured unfettered access to automated cargo-handling machines.
“The latest contract will enable us to solidify those gains by providing a clear path forward for automation projects, as the result of a new waterfront arbitration system,” McKenna said. Knowing that the arbitration system will allow them to quickly resolve the endless ILWU work slowdowns and work stoppages that kill productivity, terminal operators are ready to invest billions of dollars in automation, “dollars that will pave the way toward more productive and efficient ports,” he said.
Dockworkers engaged in more than 200 slowdowns or work stoppages during the 2008-14 contract, the PMA report stated. Employers had no choice but to rely on the “patchwork nature” of the previous arbitration system that allowed these job actions to interrupt cargo-handling operations while the local arbitrator in the individual port regions adjudicated the disputes. Oftentimes the process resulted in a marine terminal being shut down for the remainder of the work shift.
Under the West Coast arbitration system, both the ILWU local as well as the employer are able to call in the local arbitrator to resolve disagreements. Those disputes could involve a difference of opinion over manning, whether a picket line set up by a third-party group such as harbor truckers was “bona fide” under the contract, or jurisdiction. Under the former system, the local arbitrators in Los Angeles-Long Beach and Seattle-Tacoma were nominated by the ILWU and agreed to by the PMA. The PMA nominated the local arbitrators in Northern California and Portland, with the agreement of the ILWU.
Manning and jurisdiction disputes are expected to be common in the coming years as terminal operators invest in costly automation that will improve productivity, slash labor costs -- and eliminate hundreds of longshore jobs. The previous arbitration system, which critics on both sides said favored either the ILWU or the PMA, depending upon which group nominated the employer, caused some terminal operators to shy away from investing hundreds of millions of dollars to bring in automated guided vehicles, automated stacking cranes and other equipment that is not manned by dockworkers.
The arbitration system in the new contract that was ratified in late May establishes in each port range a three-person panel, one nominated by the ILWU, one by the PMA and the third will be a professional arbitrator with no previous ties to the waterfront.
“The new system will replace the patchwork nature of the old system with more uniformity and, presumably, more certainty,” the PMA report stated.
An automated terminal is quite costly. The automation project at OOCL’s Middle Harbor terminal in Long Beach will end up costing more than $1 billion, with at least half of that investment going toward the purchase of automated machines and the terminal infrastructure to support it. In order to make such investments, terminal operators must be confident that the contract’s arbitration system will prevent dockworkers from engaging in work stoppages and slowdowns that prevent the terminal from achieving its return on investment.
Beneficial cargo owners who diverted cargo to other ports during the year-long 2014-15 contracting process also need a culture of reliability if they are going to return to the West Coast. “After all, shippers crave certainty, and they crave reliability,” the PMA report stated. Under the new arbitration system, West Coast ports will resume their investments in technology and automation to reshape the waterfront, the report said.