Vice President, Transportation, Infrastructure, and Supply Chain Policy, U.S. Chamber of Commerce
June 15, 2023
UPDATE: The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) reached a tentative agreement in the West Coast labor dispute on June 14. The tentative agreement lasts for six years and covers the 29 ports responsible for most U.S. imports. We are pleased the Biden Administration listened to the Chamber’s call for intervention which resulted in this quick resolution. In a statement on June 15, Suzanne Clark commended both sides for reaching an agreement and averting widespread work stoppage and economic harm.
America’s seaports are critical gateways for goods entering and leaving the United States. Recent and ongoing work stoppages at our largest seaports along the West Coast are raising significant concerns among the business community that a large-scale work stoppage is imminent – and could be a devastating blow to America’s economy during “peak season” – when sea traffic entering our ports is at its highest.
On Friday, June 9 U.S. Chamber President and CEO Suzanne Clark sent a letter to President Biden urging the administration to intervene immediately in the West Coast port negotiations by appointing an independent mediator to help the two parties reach an agreement that prevents significant economic harm to U.S. families and the economy.
What’s the situation?
Twenty nine West Coast ports and the International Longshore and Warehouse Union (ILWU), who represent approximately 15,500 dockworkers, were in the final stages of negotiating a new labor contract that covers everything from pay to operational work rules.
The West Coast ports – which include the ports of Los Angeles, Long Beach, Seattle-Tacoma, and Oakland – are critical economic gateways and are responsible for over 50 percent of all U.S. imports. Essential to the operation of these ports are the dockworkers – the men and women responsible for loading and unloading ocean vessels at these ports.
ILWU workers and the port terminals renew labor contracts every few years. The union leadership and the port terminals – represented by the Pacific Maritime Association (PMA) – started negotiating a new contract in May 2022 and initial agreements on healthcare and other benefits indicated that negotiations were on a good path.
However, things appeared to bog down by the end of the year, with frustrations spilling out in March 2023 when ILWU members at the ports of Los Angeles and Long Beach stopped staggering their lunch breaks, essentially shutting down the ports for an extra two hours each day and triggering significant delays and backups.
Disruptions continued when the ILWU Local 13 withheld workers on April 6 and April 7, in protest of the lack of progress on contract negotiations, which effectively shut down the ports of Los Angeles and Long Beach.
Tensions continued to escalate in recent weeks, with complete shutdowns of several West Coast ports on June 2nd as a result of worker no-shows at the ports of Los Angeles, Long Beach, Oakland, Tacoma, and Seattle.
Unfortunately, strikes and lockouts related to ILWU-PMA negotiations are not without precedent. Every negotiation over the last 20 years has seen at least a short-term service disruption, however any service disruption has negative consequences, ultimately snarling supply chains and hurting businesses.
What’s at stake
U.S. ports are gateways for goods entering our country, and there is every reason to expect that traffic coming through these ports will continue to grow in the coming years.
But these recent actions are souring many shippers from using the West Coast ports. Indeed, many shippers started diverting cargoes to East and Gulf coast ports in anticipation of potential labor disruptions last year and that accelerated this year. As labor talks continue to stall, there is growing concern that these diversions could become permanent.
In addition to pay, another critical element in these negotiations impacts our long-term competitiveness, and that is the productivity of these ports, or how quickly they can load and unload ships.
A high level of productivity means containers and goods move quickly through ports, helping keep transportation costs low and getting products to store shelves quickly. Unfortunately, our nation’s ports rank as some of the least productive in the world. The World Bank Group and IHS Markit recently ranked the top ports in the world and the U.S. failed to put a single port in the top 50. Our two most important ports – Los Angeles and Long Beach – ranked #328 and #333, respectively, while our most productive port was the port of Philadelphia at #89.
Cutting the performance gap will mean modernizing our ports the way the rest of the world has already done – in part through automation. With trade volumes expected to continue growing this is especially important. Many of our ports are already at capacity and cannot handle any more traffic without degradation in service levels. Without improvements from automation and other changes, our less-competitive ports will hurt the competitiveness of U.S. businesses. But these steps can only be done through agreement with the port workers.
The Chamber continues to encourage both parties to reach an equitable agreement and end the uncertainty for American businesses and is actively in communication with parties involved in the negotiations.
Unfortunately, the West Coast port negotiations are just one of many labor agreements that have the potential to impact the nation’s supply chains this year. Two major express carriers are set to enter negotiations, and several major airlines are also in the process of contract negotiations.
We will continue to monitor these situations and update Chamber members with new developments as they occur.
About the authors
John Drake is vice president for transportation, infrastructure, supply chain policy at the U.S. Chamber of Commerce, the world’s largest business advocacy organization. In his role, Drake is responsible for representing the business community on transportation, infrastructure, and supply chain issues before Congress, the administration, the media, the business community, and other stakeholders. Drake is also a member of the Commercial Customs Operations Advisory Committee, which advises the U.S. Customs and Border Protection on improvements to U.S. trade.