Hopes Sink for Federal Mediation in West Coast Port Labor Negotiations - Global Trade Magazine
  January 20th, 2015 | Written by

Hopes Sink for Federal Mediation in West Coast Port Labor Negotiations

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Hopes are rapidly fading that a middle ground will soon be agreed upon to bring seven months of labor contract talks between the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) to a successful conclusion and prevent a catastrophic shutdown of operations at 29 ports along the U.S. West Coast.

Despite the appointment of a federal mediator, the massive divide that separates the two groups became even greater over the past week, as the rhetoric has intensified with the PMA, which represents the steamship companies and terminal operators at the affected ports, repeating its charge that more than two months of “deliberate work slowdowns organized by the ILWU are methodically reducing productivity.” The union’s action, the PMA asserts, has been the sole cause of the increasing disruption in the flow of cargo moving into and out of the ports of Seattle, Tacoma and Oakland, as well as exacerbating chronic operational problems at the ports of Long Beach and Los Angeles, the two busiest container ports in the country.

The ILWU vehemently denied the charge saying that the problems at the ports are a direct result of mismanagement, a shortage of equipment, and poor infrastructure.

While a positive development, “mediation is not the same as arbitration,” says Larry Gross, a senior consultant with freight transportation consultancy FTR in Bloomington, Indiana. “There is no requirement that either party accept the mediator’s suggestions. But history says that once the Feds become involved, then the pressure grows on the parties to get reasonable and reach an accommodation.”

In any event, though, “No one involved would have dreamed that in January 2015 talks would still be ongoing.”

Although both parties pledged to reach a smooth resolution without any impact on cargo flows, that era of good feelings has now come to an end,” Gross says, adding that the negotiations have devolved into “an extensive round of finger-pointing.”

The issues involved, says Gross, “are substantial, as steamship lines report that the U.S. West Coast ports are among the most expensive and least productive of any worldwide”—a situation that’s inflamed by the exit of the steamship lines from the chassis-supply business. That means “previous agreements between the carriers and longshore labor regarding jurisdiction for chassis maintenance talks don’t apply to the new chassis owners, and the work is now up for grabs.”

“[Shippers] need to understand that port congestion will not disappear if and when a resolution is finally reached,” Gross says, “as there are more fundamental problems in play at the ports that will remain in place even after a contract is signed.” According to Gross, those fundamental problems include “the lack of a fully workable chassis-supply model that can get the chassis where and when they’re needed”; the “tremendous peaking problems” being created by the latest generation of new mega-container carriers; and “a whole new transition that will have to occur as new carrier alliances take hold with their attendant revisions to shipping patterns and terminal calls.”

The bottom line “is that things are quite broken in the ports and it will take more than a labor agreement to fix things,” says Gross. “So don’t expect to see rapid improvement when the agreement is finally announced.”

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