Jun 6, 2023 - Economy

What's behind work stoppages at West Coast ports

Shipping containers at the Port of Long Beach in California. Photo: Tim Rue/Getty Images

Operations at several West Coast ports were "throttled" Monday due to labor stoppages or slowdowns, the WSJ reported, as union contract negotiations between dockworkers and shipping companies dragged into a second year.

Why it matters: These kinds of work stoppages have disrupted operations at West Coast ports for months, pushing more shipping activity to the East Coast and raising painfully familiar concerns about supply chain disruptions.

The latest: Some trade groups have urged the Biden administration to get involved, but the White House on Monday said it's just monitoring the situation.

  • Julie Su, acting secretary of labor, has been urging both sides to come to terms, according to a source familiar with the administration's workings.
  • Su, the administration's nominee to lead the department, helped resolve a labor dispute at the ports back in 2019 when she was California's labor secretary.

Zoom out: Contract talks began in May 2022 between the International Longshore and Warehouse Union (ILWU), which represents more than 22,000 workers across 29 ports from Washington state to California, and the Pacific Maritime Association (PMA), which represents shipping companies and terminal operators.

  • The union contract covering those workers expired in July 2022.
  • This year there have been an increasing number of so-called worker actions at the ports — meaning union members fail to show up for work, or otherwise slow down operations, leading to sporadic shutdowns.
  • For example: In March, one local union branch stopped staggering worker mealtimes — which the PMA said forced the port to shut down activity for an hour during the afternoon and in the evening. The previous contract had provisions to ensure staggered mealtimes.
  • The disruptions Monday were in Los Angeles, Long Beach and the Port of Seattle, the WSJ reported. There were also stoppages in Oakland over this past weekend.

The big picture: While the economic impact of a daylong work stoppage is negligible, the drawn-out labor negotiations are tarnishing the West Coast ports' reputation as a reliable gateway of international trade, says Jock O'Connell, international trade adviser at Beacon Economics. (Beacon advises economic development agencies in California that want to see uninterrupted trade flows, but are not involved in the negotiations.)

  • That's accelerating a long-term shift away from the West Coast, to the East Coast and Gulf Coast ports, he says.
  • Back in 2003, the ports of Los Angeles and Long Beach handled 57% of all the Trans-Pacific containerized imports. Last year the share was 45%, according to data from the Commerce Department that O'Connell cited.
  • Long term, that'll be a hit to the California economy, he says.

What's next: The parties have ironed out a few issues — even coming to terms on automation — but the thorniest issue remains: wages.

  • Negotiations are ongoing, ILU President Willie Adams said in a statement Friday. “We aren’t going to settle for an economic package that doesn’t recognize the heroic efforts and personal sacrifices of the ILWU workforce that lifted the shipping industry to record profits.”

Context: The shipping industry saw astonishing profits over the past three years, and the unions want to see some of that money.

  • But more recently, those profits have been falling back down to earth. The unions are asking for a piece of pie that's already been eaten, says O'Connell.
  • Profits in the container shipping industry in the first quarter fell an astonishing 78% — $45.7 billion — from the same period last year, according to Capital Link, which tracks the maritime sector. Still, profits are far higher than pre-pandemic levels.
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