Supply chains: High stakes port labor negotiations begin on the West Coast

·3 min read

The long-anticipated labor negotiations between the International Longshore and Warehouse Union (ILWU) and their employers represented by the Pacific Maritime Association (PMA) begin on Tuesday.

The stakes are high for supply chains as the two parties involved represent 22,000 dockworkers and shipping companies that do business at 29 West Coast ports, which account for nearly 9% of the U.S. gross domestic product.

While past contract disagreements caused disruptions, leaders from both the ILWU and PMA are downplaying those fears.

"Talks are scheduled to continue on a daily basis in San Francisco until an agreement is reached," the two parties said in a joint statement on Monday. "Both sides say they expect cargo to keep moving until an agreement is reached."

 Gantry cranes and shipping containers are seen at the Port of Long Beach in Long Beach, California, November 17, 2021. (Photo by APU GOMES/AFP via Getty Images)
Gantry cranes and shipping containers are seen at the Port of Long Beach in Long Beach, California, November 17, 2021. (Photo by APU GOMES/AFP via Getty Images)

And while cooperation has consistently been emphasized as they set the stage for this contract negotiation, there's also an expectation that reaching a deal may not happen before the current contract expires on July 1st.

“I think everybody is optimistic going into this one that we're gonna get where we need,” McKenna said on Friday during an online briefing hosted by Port of Los Angeles Executive Director Gene Seroka. “Whether we go past July 1 or not is not the issue. It's just we need to stay at the table and get an agreement without causing any further disruptions.”

'Automation is the future of our ports'

Against the backdrop of negotiations, PMA released a new study last week analyzing automated terminals at the country's two busiest ports in Los Angeles and Long Beach.

The study found that cargo handling accelerated, terminal capacity was expanded, and longshore work was generated "significantly faster" there than at conventional terminals. Furthermore, while providing benefits to shippers and consumers, the study argued that the technology also did not reduce job opportunities for dockworkers.

“Automation is offering early proof of a win-win strategy: work gains for ILWU members and productivity and efficiency gains that will drive up growth, drive down cargo-handling costs, and help restore the San Pedro Bay ports’ competitive advantage,” wrote the co-authors, former assistant U.S. Secretary of Defense Dr. Michael Nacht and ContainerTrac Inc. Founder Larry Henry.

Pacific Maritime Association (PMA) President and CEO James McKenna told Yahoo Finance last month that port automation is expected to be a key topic in the negotiations.

"Automation is the future of our ports," McKenna said.

U.S. Secretary of Labor Marty Walsh (R) stands with Port of Los Angeles Executive Director Gene Seroka at a press conference after touring the Port of Los Angeles on November 30, 2021 in San Pedro, California. (Photo by Mario Tama/Getty Images)
U.S. Secretary of Labor Marty Walsh (R) stands with Port of Los Angeles Executive Director Gene Seroka at a press conference after touring the Port of Los Angeles on November 30, 2021 in San Pedro, California. (Photo by Mario Tama/Getty Images)

Among other key findings being highlighted is that the automated machinery can stack containers higher, closer together, and more efficiently for transfer to trucks or trains.

“Critically, the study found that automation has not reduced job opportunities for dockworkers, as many workers have traditionally feared,” the authors concluded. “The gains in output in Los Angeles and Long Beach mean that contrary to fears of job losses, automation has increased, not reduced, ILWU jobs and work opportunities, including training and upskilling.”

On Friday, ILWU International President Willie Adams cited the need for a deal that protects both workers and the economy while denouncing efforts to automate marine terminals.

"To strengthen America's economy, it's not enough for ports to hold the best economic cards; they have to play them in ways that help the American workers who make, grow, and move the things we need for our lives," Adams wrote.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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