Date: Friday, May 13th, 2022
Source: Logistics Management
In advance of the negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA), which began this week, PMA President and CEO Jim McKenna offered up his take on what may be in store as the negotiations for a new deal progress. The current deal is set to expire at the end of June.
The ILWU represents more than 15,500 port workers in California, Oregon, and Washington, with more than 40 percent of U.S. incoming container traffic moving through West Coast ports at the Ports of Los Angeles and Long Beach, according to industry estimates. The PMA represents shipping lines and terminal operators at 29 West Coast ports. What's more, these ports support nearly $2 trillion of economic value in the U.S., for fiscal year 2021, which equates to roughly 9% of U.S. GDP, while supporting more than 12 million U.S. jobs.
As previously noted in LM, this is not the first time a contract between the organizations has been set to expire. And one does not have to go too far back to see how acrimonious negotiations were, as in 2015, in the months prior to the June 30 deadline, it required the U.S. Federal Mediation and Conciliation Service to step in to help the sides find a way to come to an agreement over stalled labor negotiations. What’s more, the ongoing tension between the parties subsequently resulted in hindered productivity and also was a contributing factor in port congestion on the West Coast, especially as it led up to the 2016 holiday season. The PMA said, at the time, that the state of terminal productivity at the five largest West Coast ports was approaching gridlock, due in large part to what it labeled ILWU-staged shutdowns.
In a conversation with Port of Los Angeles (POLA) Executive Director Gene Seroka on POLA’s monthly media call late last week, McKenna observed that from a general perspective, the relationship between the two sides is very healthy.
“I think the pandemic and coming together and really working towards overcoming obstacles [from the pandemic] has really solidified our ability to work together,” he said. “I think as we head into negotiations, we are going to see that same type of attitude. There will be difficult issues to discuss…. hours, wages, working conditions that everyone discusses, and there will be other topics. I think we are focused on this contract like all the other contracts; it will have a start and a finish and whatever happens in the middle will be between the two sides
Hopefully everybody is focused to the point that there will be no further disruption to a fragile supply chain and I think we are going in with that spirit of cooperation. But until you get to the table and see the demands that come across and the proposals that go across, you are really at a wait and see moment in time but again I think we are going in under very healthy conditions.”
While making it clear the contact will not be negotiated in the press, McKenna did not shy away from saying that there will be challenging issues to address, including hours, wages, and working conditions, which he said will be front and center.
“The only people that work in the 29 West Coast ports are ILWU members so there is always a lot of leverage on this contract,” he explained. “I think now there is probably leverage on both of us. With all of the ships that are anchored or slow steaming towards us right before a midterm election, I think there is a lot of attention and a lot of focus by anybody and everybody, and I think we all realize that. Leverage is always there, and I think that where we are at today, with the backlog of ships, 35 today [on Friday, May 6] …. if China kicks loose and sends those 500 ships sitting there back at us, we are going to see a really big surge. We have to realize that and do what we can to get to the table, get a contract and get the agreement and do so without any further disruption. We are both committed to getting to the table, getting a contract and doing so without any disputes or disruption to the supply chain.
As for the potential duration of these negotiations, McKenna was blunt, saying he fully expects them to go past July 1, as “they always do.”
Looking at three different examples, he further proved his point:
- in 2002, it went past its expiration date and into October which was followed by a 10-day lockdown, with things opening back up after the Taft-Hartley Act was invoked, and it took three months to recover;
- in 2008 there was an automation agreement, which McKenna described as a big deal and one of those issues that many thought was going to be tough to overcome, whereas that contract was settled three weeks after it expired, with little to no disruption; and
- in 2014, he said there were no real major issues on the table and it took until eight months after expiration with some slowdowns to get to an agreement
“Each contract is different and you cannot decide them on the front end,” he said. “Again, I think everybody is optimistic going into this one and we are going to get to where we need [to], you cannot decide them on the front end. Whether we go past July 1 or not is not the issue. It is just that we need to stay at the table and get an agreement without causing any further disruptions. Every contract has a life of its own. It has a start, it has a finish. What happens in between is up to the parties at the table. And as we get into this, I think we are in a good place. Everyone is focused on getting where we need to be in a constructive manner.
Port automation was a theme of conversation, too, with the PMA recently having issued a report on automation needed to boost capacity at West Coast ports.
When asked if port capacity could be increased at the same levels by redeveloping terminals into denser stacking operations but without automated equipment, McKenna said that is yet to be seen, stating that the technology and equipment that is available now really is automated equipment.
“We have seen it at two facilities in southern California,” he said. “The dense pack that you achieve with an automated facility is really quite amazing. You can push these things from 50%-to-75% more cargo inside of them, and the reality of the situation is these facilities are in urban areas. There is no room or no way to extend or expand these facilities themselves so you have to go up and go out. And a dense pack stack is exactly where you need to be and automation gets you two different things. It gets you the ability to not only handle more cargo and more capacity in a single terminal but it also gets you to a regulatory place we need to be by 2030. We have had these discussions on an ongoing basis with the ILWU and they are always difficult conversations.”
ILWU President Willie Adams said in April that fears about getting a deal done may be overblown.
“There are adults on both sides of the table, it is called a process,” said Adams. “I believe in the American process of collective bargaining. That is a right as an American. We will get an agreement. It takes both sides, and right now we are getting ready. The other side, they are doing what they have to do. Sometime in May we are going to sit down, and we are going to get an agreement, and I wish, instead of people writing things and saying we are going to throw the baby out with the bathwater…they ought to be talking about the positive things out of Covid, all of the good things that have come out of this.”
To that end, he said there has been a heavy focus on ports and infrastructure, as well as other things that will benefit Americans and American workers.
Adams added that getting a new deal done requires collaboration between the two parties, likening it to a marriage, in that there are some bumps and ups and downs.
“We will get an agreement,” he said.
An industry stakeholder observed that, for a best-case scenario with these negotiations, that would be one in which the PMA reaches an agreement with the ILWU before the contract expires, avoiding labor actions or work slowdowns, while retaining their right to automate without union interference. And the worst-case scenario would be if contract negotiations drag on for months past the contract deadline, resulting in worker slowdowns and severe congestion and backlogs at the ports.