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Port Labor talks enter new high-stakes phase with contract expiration

Labor talks between West Coast dockworkers, cargo handling companies and container shipping companies are entering a new high-stakes phase with the expiration of the contract covering US ports from Washington state to Southern California.

With the two sides remaining far apart on issues such as pay and automation, the multi-year contract was set to expire late on Friday, raising fears of possible disruptions at major US gateways for Pacific trade, including the nation’s busiest container port in Los Angeles and Long Beach.

In a joint statement on Friday, the two sides said they had not reached an agreement to extend the contract, while work on the docks continues as negotiations over a new labor agreement continue.

Congestion at Southern California ports has been at the center of U.S. supply chain woes that have contributed to bursts of inflation and tied up retail and manufacturing inventories.

More recently, the gridlock has eased, but a return to heavy backlogs at West Coast ports ahead of peak holiday shopping periods this fall would be disastrous for traders. It would also be a blow to the Biden administration, as port congestion would drive up shipping costs as the administration tries to tame inflation that is running at a four-decade high.

The International Longshore and Warehouse Union, which represents 22,400 longshoremen at 29 ports, and the Pacific Maritime Association, which represents employers and carriers, met with President Biden in early June to discuss the talks. The two sides later issued a joint statement saying they were not preparing for a worker strike or lockout.

On Thursday, Labor Secretary Marty Walsh said the talks have gone smoothly so far, with no major disagreements between the sides.

Secretary of Labor Marty Walsh.


Photo:

Mario Tama/Getty Images

“This negotiation has been going on for six weeks,” Mr Walsh said. “It’s not a long time and this contract is a very long contract. I guess there will be problems. There will be tough conversations. But that’s the beauty of negotiations.”

Importers and commodity industry officials remain wary after disputes during contract talks in 2002 and 2014 caused dozens of container ships to pile up off the coast of Southern California, costing individual retailers millions of dollars in increased costs and lost sales. .

No one expected a deal before the contract expired. Shipping industry officials have said the union’s leverage is greater after the contract expires and when the movement of goods into the country becomes more urgent later in the year.

Some importers are already rerouting cargo to East Coast ports as a hedge against West Coast layoffs. “I think everyone is expecting some sort of slowdown and that’s why we’re seeing such a shift in cargo from the West Coast to the East Coast,” said Craig Akers, director of operations at the Game Shippers Association.

The two sides agreed not to talk about the negotiations, which began May 10 in San Francisco. Before the talks began, the parties said that discussions would be held every day. Observers say union leaders took two-day breaks in talks, slowing progress.

Ending the contract without an extension removes workplace grievance mechanisms and creates the specter of a slowdown in the event of labor disputes at one of the ports.

People familiar with the talks say the two biggest issues in this year’s negotiations are workers’ pay and employers’ desire to bring more automation to their container terminals.

The ILWU agreed to allow automation in a previous contract, but in practice has opposed operators’ efforts to add robotics to the docks. Two of the 13 container handling facilities at Southern California ports have been fully or partially automated. Two other terminals have begun to introduce automation or say they plan to.

The employers’ group released a report before talks began in May touting the effectiveness of automation, saying the most advanced automated facilities at Southern California ports process containers up to twice as fast as neighboring conventional terminals. He also cited payroll data, saying the average longshoreman with more than five years of full-time employment in 2019 earned nearly $190,000 a year.

A report authored by the union and released Thursday counters that automation is neither efficient nor productive and that it is eliminating jobs. As for wages, it said in 2019 the average longshoreman in Los Angeles and Long Beach — which make up about three-quarters of the workforce coast-wide — earned $89,950.

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“It can be loud, smelly and hard work, but I think we’re well compensated,” said Jaime Hipsher, a 46-year-old longshoreman who drives a truck that carries containers to the ports. Ms. Hipsher said she earns between $80,000 and $110,000 a year, depending on how many shifts she can take, but said there are fewer jobs to choose from because of increased automation.

The labor report also said California should impose a tax on automated terminals in Southern California to offset lower tax revenue from any longshoreman jobs lost to automation.

The union argued its workers deserved a pay rise after moving record amounts of cargo during a global pandemic as ocean shipping companies posted record profits. Denmark-based Sea-Intelligence estimated that global shipping companies that report public results posted more than $120 billion in profits last year, three times the profits of the previous 10 years combined.

Shipping industry officials say importers are diverting cargo away from the West Coast in part because of last year’s traffic congestion and because they continue to experience delays in inland transportation from Los Angeles and Long Beach.

East Coast cargo surge causes backup of ships from New York to Savannah, Ga.

Griff Lynch, executive director of the Georgia Ports Authority, said Thursday there were 34 ships waiting to dock off Savannah.

“There aren’t many shippers we talk to that don’t say they’re trying to work around the West Coast,” he said.

Every day, millions of sailors, truckers, longshoremen, warehouse and delivery workers keep mountains of goods moving into stores and homes to meet consumers’ growing expectations for convenience. But this complex movement of goods that underpins the global economy is far more vulnerable than many imagined. Photo illustration: Adele Morgan

Write to Paul Berger at Paul.Berger@wsj.com

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Port Labor talks enter new high-stakes phase with contract expiration

Source link Port Labor talks enter new high-stakes phase with contract expiration

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