Possible West Coast Shipping Port Strike

Another strike at the West Coast Ports?

The end of this month will mark the end of a six year, tensely negotiated contract between the ILWU and the Pacific Maritime Association. Given the fragile state of the US’s economic recovery, conflict between differing port unions and technological innovations that may affect future job security, there is a lot of incentive for this year’s talks to take less time and be more productive. Still, it makes sense to be aware of the situation and to make strike contingency plans in the event of a west coast shipping port strike.

What are the Major Port Strike Related Issues?

According to a recent article appearing in the Journal of Commerce, the main issues are a bit surprising as wages, always important, are not thought to be front and center this time around. In their opinion, they see three major issues the union is anxious to address.

1. Health Care – At present members of the ILWU have “Cadillac” insurance plans that under the federal Affordable Health Care Act may be subject to a substantial excise tax beginning in 2018. Who will pay this tax, the shippers or the unions, is the hot issue on the table. It may also impact contract duration. The unions are asking for a 3 year contract to avoid being locked into an agreement before the tax goes into effect. Management is pushing for a six year contract to avoid re-entering negotiations after such a short period of time.

2. Automation and Jurisdiction – The majority of container ports now employ technology to streamline operations. It’s not unusual to find sophisticated global positioning satellites, on-line, yard management systems, optical character readers and other hi-tech devices that alter labor usage or eliminate jobs. For instance, disputes have arisen between the ILWU and the International Brotherhood of Electrical Workers over control of refrigerated container jobs. Fights have flared up with the International Association of Machinists over equipment maintenance and repair jobs. The ILWU believes these jobs should come under its control.

3. Carrier Alliances – Last year Maersk Lines, CMA CGM and Mediterranean Shipping Company, three of the world’s largest carriers, formed an alliance known as P3 Network. The goal of the Alliance is to increase port productivity. To accomplish this goal, carriers reassign ports and terminal calls to push ports (and the labor working at them) to compete against one another and lower costs. This is likely to be a continuing hot issue.

What are the Probable Results of ILWU Strike Threat? 

There are several possible outcomes:

1. The first and probably most unlikely outcome is that agreement will be reached before the contract ends.

2. The second is that there will be “slow-downs” similar to those experienced in prior negotiations. This may result in extended delivery times and delays loading and unloading at the docks. According to the California Apparel News, this is already occurring at the Port of Los Angeles and other west coast port locations.

3. The third is a Strike, with extended disruption of shipping.

What Can Importers and Exporters Do to Protect Against a Strike?

1. Plan Ahead – Where possible arrange earlier deliveries and map out alternative routes. Have a strike contingency plan in order.

2. Be Flexible – Stay in heightened communication with your customers and prepare to make alternative arrangements to avoid cargo delivery delays.

3. Stay Informed – Read the trade journals and speak with other professionals in the industry. Most of all, keep your customers informed to prevent unpleasant surprises.

What is West Coast Shipping Doing to Mitigate a Strike?

The management of West Coast Shipping is staying abreast of the talks and encouraging both sides to reach an early agreement. The company believes there is little for either side to gain by striking, while there is much for both sides to lose. In the event there is a strike, the company is prepared to ship customer cargo through Houston or New York and will keep everyone informed as the talks develop.

Please contact West Coast Shipping for up to date information about the ILWU strike.