A week has passed since the contract expired. The International Longshore and Warehouse Union and the Pacific Maritime Association continue negotiations toward a new coast-wide contract and have pledged no disruptions. However, shippers remember all too well the 2002 port strike that lasted two weeks and ended only when the President of the United States invoked the Taft-Hartley Act.
Among the topics of negotiation include who will pay for an estimated $150m per year Affordable Healthcare Act tax on the union’s premium health care plan. It was suggested at a conference in March of this year that negotiations may include a shorter, three-year contract instead of one of six years. The health care tax doesn’t kick in until 2018, and a shorter contract would leave that topic on the table for another negotiations team.
So, are negotiations progressing? No one seems to know, it has been very quiet. According to the Journal of Commerce, some unrelated disruptions have occurred such as longshoremen in a work slowdown at the TraPac terminal because of a dispute over automation and heavy truck traffic due to chassis shortage. Also, the publication reports that organizers backed by the Teamsters Union plan to picket terminals in Los Angeles-Long Beach and target the trucks of three drayage companies the union has been trying to unionize.
Shippers appeared to have been prepared for a potential disruption as TEUs spiked in April and to a lesser degree in May at the Ports of Los Angeles and Long Beach. There were also some shifts to other ports, most notably those in Canada. For May, Canada’s Port Metro Vancouver noted a 14.5% year-over-year increase in containers after a 2.7% rise in April.
Within the next month or two, shippers will need to replenish inventory once more for seasonal sales. However, the longer the negotiations continue the likelihood for additional shifts to other ports such as Vancouver will occur.
As noted in a recent Ti briefing, “Nail biting begins as labor contract negotiations continues for US West Coast ports” the 2002 port strike resulted in market share declines for the Los Angeles-Long Beach ports. Market share of Asian containerized imports declined from 56.5% in 2003 to 48.8% in 2012.
Despite the pledge of no disruption, the longer it takes to reach an agreement may result in uncertainty among shippers and as such may shift cargo to other ports in Canada or to the US East Coast ports.