Progress at Last in West Coast Port-Labor Negotiations

O ne year after negotiations began, the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) are inching towards a new labor contract. West Coast dockworkers have been operating without a contract since July 1, and the uncertainty has caused shippers to seek alternative ports. Without a contract, the dockworkers can strike whenever they want, and ordinary arbitration processes for resolving disputes aren’t in effect.

Reports from the negotiations, which take place behind closed doors, seem to indicate that the issue of automation, a major sticking point, has been tentatively resolved. That tentative breakthrough, which is said to have happened late last month, was the first major advance in negotiations since last summer.

Dockworkers pitched a fit about lunch breaks in March, and effectively shut down the ports of Los Angeles and Long Beach for about 24 hours in early April by not showing up for scheduled shifts. When they returned to work, they began spuriously flagging automated equipment for nonexistent safety infractions, slowing cargo operations while the machinery was inspected.

This past week, a tentative deal was reached for manning requirements at non-automated terminals, and the union disruptions died down. The issues left are two biggies: wages and pensions. The Wall Street Journal reports that the ILWU wants a 10 percent wage increase in the first year of the new contract, which is what dockworkers in Hawaii got.

The sides have not yet agreed on how long the new contract will last. The PMA wants a six-year contract, while the ILWU wants a two-year contract. Either way, the contract’s start will be backdated to July of last year, and whenever it is agreed upon by negotiators, it will take a few additional months to be fully approved by union members.

If the contract is only for two years, the ILWU and the PMA will be back at the negotiating table less than a year after it is signed, essentially keeping the West Coast ports in a state of uncertainty. Shippers will continue to hesitate about choosing them when other options are available.

The share of inbound ocean freight going through Los Angeles and Long Beach is unusually low, and shippers have been increasing their usage of East Coast and Gulf Coast ports instead. The weak flow of freight on the West Coast is messing up intermodal markets throughout the country. The CEO of J. B. Hunt reported falling volumes on the company’s April earnings call and said, “We need a West Coast labor agreement to finalize and give customers confidence in the West Coast for imports more than anything we need in the economy.”

Other ports are capitalizing. The Georgia Ports Authority is investing in major expansions at the port of Savannah, which is the country’s fourth-largest port for inbound containers, after Los Angeles, Long Beach, and New York/New Jersey. Savannah now handles 10.5 percent of imports from Asia.

But Savannah has had to dodge a different form of union obstructionism that has hindered expansion plans at the neighboring port of Charleston. The South Carolina Ports Authority is currently battling the International Longshoremen’s Association (ILA), the East Coast dockworkers’ union, in federal court over the ILA’s lawsuit to prevent ocean carriers from using Charleston’s newly built terminal, which employs non-union labor. The ILA sued two ocean carriers that docked at the new terminal, claiming that using non-union labor to unload the ship was a violation of their coast-wide contract.

The Charleston terminal, which opened in 2021, was the first new ocean-freight terminal built anywhere in the United States in ten years. The tangle of laws, regulations, and union contracts makes it extremely difficult to modernize ports in the U.S. To avoid Charleston’s problem, Savannah settled on expanding existing terminals rather than building entirely new ones. When the $1.4 billion project is fully complete in 2026, the port will have 50 percent more capacity, as well as a new container-storage yard and new cranes.

Squeezing every last drop out of every negotiation may feel good to the ILWU in the short term, but it could hurt the union’s members in the long term. A declining market share due to labor uncertainty isn’t going to help the West Coast ports, and it’s certainly not good for the U.S. economy as a whole, including many workers in other industries whose jobs depend on imports. About half of U.S. imports are inputs to domestic production of other goods.

Yet the short term is what the ILWU cares about, and by defining the success of negotiations in terms of avoiding a work stoppage, the union is almost certainly going to get what it wants: little automation and higher pay and benefits.