A contract between shipping companies and 22,000 West Coast dockworkers expired over the weekend. But both sides continued to talk and said they want to avoid a strike that could savage an economy already stressed by soaring inflation and supply chain woes.
The contract that expired last Friday covered workers at ports from California to Washington state that handle nearly 40% of U.S. imports.
“While there will be no contract extension, cargo will keep moving, and normal operations will continue at the ports until an agreement can be reached,” said a joint statement from the Pacific Maritime Association and the International Longshore and Warehouse Union.
The ILWU is the union representing Pacific dockworkers, and the Pacific Maritime Association is a trade group for cargo carriers and terminal operators. Its members include such global shipping giants as Maersk and Evergreen Marine.
The talks are so crucial that President Joe Biden even stepped in last month and met with both sides in Los Angeles. They are taking place against the backdrop of surging imports that left backlogs of ships anchored offshore, and declining exports.
Both sides said last month that they weren't planning any work disruptions, but U.S. industries are clearly worried.
In a letter to Biden issued hours before the latest contract expired, about 150 trade groups ranging from truckers to agricultural, chemical and toy industries urged the administration to work with both parties to extend the current contract, negotiate in good faith and agree to avoid actions that further disrupt the ports.
The letter stressed that the groups are entering their peak season for imports as retailers stockpile goods for the fall holidays and back-to-school items.
“We continue to expect cargo flows to remain at all-time highs, putting further stress on the supply chain and increasing inflation,” the letter said. “Many expect these challenges to continue through the rest of the year.”
A major issue in the talks is automation of port facilities. The union argues that it will cost the jobs of crane operators and other workers, who can earn $100,000 or more per year. The Pacific Maritime Association argues that automation will actually will increase employment by enabling ports to move more cargo.
Ports already have been struggling to handle container traffic, much of it from Asia, where ports are heavily automated.
After the COVID-19 pandemic began to take hold in 2020, cargo traffic to ports slumped drastically. But then it recovered and has been booming since. Soaring demand has led to traffic jams at the twin ports of Los Angeles and Long Beach, which in 2021 alone moved some 20 million cargo containers. The ports, collectively known as the San Pedro Bay port complex, alone handle more than 30% of waterborne containerized imports and exports in the U.S.
In January, some 100 ships were waiting to get into the port complex, but that total is now down to 60 or even as low as 20 at times, Port of Long Beach Executive Director Mario Cordero said Tuesday.
Cargo is loaded and unloaded 16 hours a day, on average, Cordero said. However, the ports need to have a “24-7 mindset" to deal with Asian traffic, where ports operate around the clock, he said.
Contracts are renegotiated every six years, and Cordero said most have concluded without disruptions.
However, a lockout in 2002 and an eight-day strike in 2015 cost the U.S. economy billions of dollars and forced the administrations of then-presidents George W. Bush and Barack Obama to intervene.
Cordero said he hadn't seen any work slowdowns at the port and was optimistic that the current negotiations would end with a fairly quick resolution.
“The world’s looking at us to make sure that were moving the cargo," he said. “I think the administration has made it clear that they expect a reasonable ... outcome.”
Unionized dockworkers also are seeking a raise and argue that shipping lines can afford it. With global demand, overseas freight shipping firms are seeing record profits.
Last month, Biden signed the Ocean Shipping Reform Act — meant to make shipping goods across oceans cheaper — and blasted the concentration of corporate shipping in the hands of nine foreign-owned companies.
“These carriers made $190 billion in profit in 2021, seven times higher than the year before,” Biden said. “The cost got passed on, as you might guess, directly to consumers, sticking it to American families and businesses because they could.”
