US supply chain stakeholders relieved by new West Coast port agreement

Port of Long Beach (POLB) chief executive Mario Cordero expressed optimism about a contractual agreement reached last week between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) that caused a sigh of relief for supply chain stakeholders and companies in the United States and abroad.

“Remember that the PMA and ILWU have made a pact that there will be no shutdown, no lockout and no strike. I think they have fulfilled that commitment,” Cordero said in an exclusive interview with Xinhua on Friday, adding that there hasn’t been a recent overload in the POLB.

The six-year provisional contract covers workers in all 29 West Coast ports. Their previous agreement with the PMA expired over a year ago. The terms of the new tentative agreement have yet to be approved by union members and ratified by both parties, so details of the agreement have not been disclosed.

“While the final decision rests with our members, we believe our time at the negotiating table has been well spent,” ILWU President Willie Adams said in a statement. “The agreement represents the hard work of our grassroots and the sacrifices they have made during the pandemic.”

Executives from the US Chamber of Commerce, the National Retail Federation, and the PMA and ILWU had all urged the Joe Biden administration to appoint a mediator to help reach an agreement, citing a 2022 report , which has estimated the daily cost to the US economy at nearly half a billion dollars – some sources say up to $1 billion a day – in the event of a port closure.

While the exact details of the tentative agreement are yet to be revealed, Adams thanked Acting Labor Minister Julie Su for her leadership during the negotiations.

The termination of the contract comes after months of mounting concerns about delays, disruptions and closures to shipping in West Coast ports from San Diego to Seattle. These have had a problematic impact on the reliable flow of goods through the ports, raising alarm bells among those involved in the supply chain that worse problems may lie ahead.

The PMA and various business and shipping associations had publicly accused the ILWU of conducting disruptive labor measures such as work slowdowns, withholding skilled workers and intentionally conducting unscheduled inspections. They claimed these measures disrupted normal operations, causing ships to miss their scheduled departure times and, in some cases, even bringing terminal operations to a halt.

The ILWU has consistently denied these allegations, blaming the slowdown on individual workers’ frustration at the lack of an official agreement to protect them.

Cordero also expressed pride in the dockers who have continued to receive POLB’s top marks for their service, and commended the men and women who have worked hard on the docks since the start of the COVID-19 pandemic to help to transport an unprecedented amount of cargo.

The impact of shipping delays went beyond the immediate economic cost. Shippers had already begun diverting cargo to the Gulf of Mexico and East Coast ports, resulting in a drop in cargo volumes at the key gateway for US trade with Asia, the ports of Long Beach and Los Angeles. Such diversions, if permanent, could have a lasting impact on the local economy around the affected ports.

Cordero told Xinhua it remains to be seen how much of that diverted shipping will return to twin ports of Long Beach and Los Angeles, but he’s confident both will continue to be competitive.

“For the Port of Long Beach, we recognize that shippers have options, and that’s good for the industry,” he said. “But we also know there will be a good percentage that will return to the largest gateway in the country simply because we have an important cost advantage.”

“We will remain very competitive – especially with cargo from Asia,” he told Xinhua.

The deal’s good news comes at a time when shipping has declined globally in the wake of the COVID-19 crisis, as many consumers are turning to sourcing at least some of their purchases from local retailers rather than buying the majority of their goods online and to be sent. This has resulted in double-digit declines in shipping traffic in most ports around the world.

Given the seriousness of the situation, the recent agreement between the PMA and the ILWU offers a glimmer of hope. However, concerns remain as a deal awaits full approval.

The next step in the process involves the ILWU’s ratification procedures, which include a Contract Caucus composed of delegates from all 29 chapters along the West Coast. Delegates examine the agreement and make a recommendation to the union members, who vote to accept it. This process usually takes a few months.

All eyes are now on the ILWU ratification process in hopes that it will pave the way for stable and efficient operations in West Coast ports for years to come.

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