Port Labor talks enter new, high-stakes phase as contract expires

Crowding at those ports has been at the center of US supply-chain woes, which have contributed to spikes in inflation and tied Retail and Manufacturing Inventory,

Gridlock has been eased recently, but the return of large backlogs at West Coast ports ahead of the peak holiday-shopping period this fall would be disastrous for traders. that would also be a blow Biden AdministrationAs the government tries to contain inflation running at a four-decade high, port congestion will drive up shipping costs.

The International Longshore and Warehouse Union, which represents 22,400 dockworkers at 29 ports, and the Pacific Maritime Association, which represents employers and ocean carriers, met with President Biden in early June to discuss negotiations. Later both the sides issued a joint statement saying that they are not preparing for strike or lockout of workers.

On Thursday, Labor Secretary Marty Walsh said talks have gone smoothly so far, without major disagreements between the two sides.

“This conversation has been going on for six weeks now,” Mr Walsh said. “It’s not a long time and this contract is a huge contract. I’m assuming there will be issues. Tough negotiations are going to happen. But that’s the beauty of negotiations.”

Importers and freight industry officials remain wary after conflicts during contract negotiations in 2002 and 2014 saw dozens of container ships piled up off the Southern California coast, costing individual retailers millions of dollars and losing sales. .

No one expected an agreement before the expiration of the contract. Shipping industry executives have said consortium profits are higher after contracts expire and when bringing goods into the country becomes more urgent later in the year.

some importers are Already resending cargo to East Coast ports As a defense against West Coast disruptions. “I think everyone is anticipating some sort of slowdown and that’s why we’re seeing such a shift of cargo from the West Coast to the East Coast,” said Craig Akers, operations director for the Toy Shippers Association.

The two sides agreed not to talk about the talks that began in San Francisco on May 10. Before the talks began, the parties stated that discussions would be held daily. Observers say union leaders have taken a two-day break in talks, slowing progress.

With the expiration of the contract, the union can either extend the agreement for another 30 days while negotiations continue or its members operate without a contract. This will remove the mechanism for handling workplace complaints and increase the chances of slowdown in case of labor disputes at any port.

People familiar with the talks say the two biggest issues in this year’s talks are worker pay and employers’ willingness. Bring more automation to their container terminals,

ILWU had agreed to allow automation in a previous contract, but in practice it has struggled against operators’ attempts to add robotics to the dock. Of the 13 container-handling facilities at Southern California ports, two are fully or partially automated. Two other terminals have started rolling out automation, or say they plan to do so.

Before negotiations began in May, the employers’ group released a report detailing the potential of automation, noting that the most advanced automated facilities at Southern California ports processed containers twice as fast as at neighboring traditional terminals. . It said, citing payroll data, that the average dockworker with more than five years of full-time experience earned about $190,000 annually in 2019.

A report written by the union and released on Thursday said automation is neither efficient nor productive and it eliminates jobs. On salaries, it said the average dockworker in Los Angeles and Long Beach — who make up about three-quarters of the onshore workforce — earned $89,950 in 2019.

“It may be loud, stinky and hard, but I think we are well compensated,” said Jaime Hipscher, a 46-year-old dockworker who drives a truck that hauls containers to ports. Ms. Hipsher said she earns between $80,000 and $110,000 per year, depending on how many shifts she can take, but added that there are fewer jobs to choose from because of expanded automation.

The Labor Report also states that California should tax automated terminals in Southern California to offset the reduced tax revenue from any dockworker jobs due to automation.

The union has argued that its workers deserve a pay increase after moving record amounts of cargo during the global pandemic as maritime shipping lines posted record profits. Denmark-based C-Intelligence estimated that global shipping lines that publicly report results counted more than $120 billion in revenue last year, more than triple the combined profits of the past 10 years.

Shipping industry officials say importers are moving goods off the west coast because last year’s crowd and because they still face delay in inland transport From Los Angeles and Long Beach.

Ship backing up from cargo boom off East Coast New York For Savannah, Ga.

Georgia Ports Authority executive director Griff Lynch said Thursday there were a record 34 ships awaiting a berth off Savannah.

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

write to Paul Berger paul.burger@wsj.com