09 May Port cargo traffic rises ahead of labor talks
Big ships packed with containers are flowing into the nation’s major West Coast ports at a frenetic pace as negotiators prepare to begin talks on a new union contract for 13,600 dockworkers, according to labor experts and an official with the National Retail Federation.
Some officials say the rush to get cargo into West Coast seaports is a hedge against a possible labor disruption when the six-year dockworker contract expires July 1 – though some say the jitters may be unfounded.
“Folks are worried from the industry side,” said Jonathan Gold, vice president for supply chain and customs policy for the National Retail Federation, a Washington, D.C.-based trade group. “Companies are definitely looking at contingency plans, but they all come with a cost. They have to pay extra for warehousing, and shift (cargo deliveries) to the East Coast and Gulf (of Mexico) coast and then bring the cargo back west. They’re also looking at Canada and Mexico and, as a last resort, air cargo.”
Gold said a huge volume of cargo is expected to move through the West Coast ports this summer.
“We want to make sure there aren’t any supply chain disruptions that would impact the cargo flow,” he said. “Our members say they’d rather have a contract deal before it expires. That uncertainty is making our folks nervous.”
Gold forecasts U.S. container volumes to rise 3.5 percent in May, underscoring a strong economic rebound. The boost in imports comes as the trade group forecasts a 4.1 percent increase in retail sales.
A lot is at stake with the twin seaports of Long Beach and Los Angeles. About 7,000 union dockworkers are employed, and more than 40 percent of the cargo moved into the U.S. comes through the ports complex.
The retailers, citing rattled nerves from a 2002 dockworker lockout that cost the economy as much as $2 billion a day, want to avoid costly disruptions just as the holiday cargo rush gains momentum.
Representatives of the Pacific Maritime Association and the International Longshore and Warehouse Union are scheduled to begin negotiations Monday on a new contract. Some predict negotiations will continue well into July before a deal is reached.
“Retailers are always full of drama and sending hysterical, and usually wrong, messages that the sky is falling for big retailers like Target and Wal-Mart,” said Craig Merrilees, an ILWU spokesman. “This is a ritual they go through every time a contract comes up. They make all kinds of pronouncements that have little to do with reality.”
Nelson Lichtenstein, director of UC Santa Barbara’s Center for the Study of Work, Labor and Democracy, said the big sticking point will be who pays for a so-called “Cadillac tax.” The tax comes due in 2018 under Obamacare on the most lucrative of health care plans – which is what the longshoremen have. Its price tag could be as high as $150 million.
“The mood is that there won’t be a strike. But the PMA could always jack it up and throw something on the table,” said Lichtenstein, citing PMA’s historic push to shrink the workforce through automation. As an example, he pointed to marine clerks who assign work in the ports with computers.
In the past, the PMA has argued for computers to be taken away from high-paying clerks and instead subcontracted to a nonunion workforce in Utah or elsewhere.
“Why pay all that money if the work can be done anywhere?” Lichtenstein said.
Other issues expected include jurisdictional ones over who performs dock jobs for PMA members in the West Coast’s 29 ports and competitive ones that could shift some business to other ports on the East Coast, Canada, Mexico or elsewhere. Los Angeles and Long Beach ports make up about 85 percent of the container volume in the West.
The last major shutdown in western ports occurred in 2002, when employers locked out dockworkers in the ports for 10 days, creating a weekslong backlog.
“I don’t think anyone wants to bring the house down,” said Peter Hall, a professor with expertise in port cities and labor issues, at Simon Fraser University in British Columbia, Canada. “This is not 2002. There won’t be a lockout. My prediction is it will be surprisingly quiet. I just don’t have a sense that something is really pressing.”