U.S. Secretary of Labor to Assist in Port Labor Negotiations
The White House has dispatched Secretary of Labor Thomas Perez to San Francisco in an effort to broker an agreement between the Pacific Maritime Association (PMA) and the member International Longshore and Warehouse Union (ILWU). A breakdown in contract negotiations between the two, despite four weeks of federal mediation, has led to a temporary, days-long shutdown of cargo-handling operations at 29 ports along the U.S. West Coast that has severely impacted the supply chain linking the U.S. with suppliers and export markets in Asia.
After nearly nine months of heated contract negotiations between the two, talks have stalled with the PMA, which represents the ocean carriers and terminal operators at the ports, saying it is unwilling to pay union workers higher wages for weekend shifts, as well as today’s Presidents Day holiday. The breakdown in negotiations is exacerbated by labor slowdowns, chronic equipment shortages and other infrastructure issues that have clogged the flow of container cargo from Seattle to San Diego to the point of near gridlock.
On Friday, February 13, both sides agreed to a federal mediator’s request for a 48-hour news blackout. The day before, the two sides held a bargaining session that marked their first face-to-face meeting in nearly a week.
The cost to the economy is staggering as the flow of goods that moves through the ports totals approximately 13 percent of U.S. GDP.
The ports of Los Angeles and Long Beach combined handle upwards of 40 percent of imports moving into the country from Asia—everything from toys and apparel to computer components and auto parts. As of Saturday, more than 30 containerships have reportedly been anchored off the adjacent ports—in the best of times, the two busiest container ports in the country—waiting for a berth.
Last fall, the National Retail Federation (NRF) and the National Association of Manufacturers (NAM) formed a consortium of more than 160 associations representing a wide spectrum of U.S.-based manufacturers, farmers, wholesalers, retailers, importers, exporters, and transportation and logistics providers to press Washington to intervene in the stalled negotiations.
In November and December, letters were sent to President Barack Obama urging immediate intervention in the negotiations and expressing our continued concerns with the status of the West Coast port labor negotiations and the impact the ongoing congestion and slowdowns are having on all segments of the economy. A federal mediator was finally appointed last month to oversee the talks.
Responding in a brief statement to Labor Secretary Perez’ participation in the negotiations, Jonathan Gold, the NRF’s vice president for Supply Chain and Customs Policy, said, “We welcome the administration’s attention to this important national and international economic and supply-chain issue and hope it recommits the two sides to reaching a deal. The slowdowns, congestion and suspensions at the West Coast ports need to end now.”
In June 2014, the NRF and the NAM issued an economic analysis in June 2014 that found a protracted port shutdown would cost the U.S. economy approximately $2 billion a day.
The NRF-NAM analysis estimated that a five-day stoppage would reduce U.S. GDP by $1.9 billion a day. “This would increase exponentially with a 20-day stoppage resulting in a loss of $2.5 billion a day,” the report said.