More than 150 U.S. trade associations wrote to President Biden today asking the administration to continue to work with members of the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) to reach a new labor agreement, hours before the groups’ current contract is set to expire.
Representing everything from agriculture and automobiles to retailers and trucking companies, the groups said the administration should push to immediately extend the current contract between the PMA and ILWU, saying it would help reassure businesses, workers, and consumers that cargo will continue to flow through West Coast ports as negotiations continue–a vital concern as peak shipping season gets underway this summer.
The PMA represents shipping lines and terminal operators; the ILWU represents dock workers in California, Oregon, and Washington. The contract covers about 22,000 workers at West Coast ports.
In a joint statement June 14, PMA and ILWU said cargo operations would continue beyond the contract expiration and that neither party was planning any work stoppages or lockouts that would worsen supply chain congestion. Extending the current contract would help ease supply chain stakeholders’ concerns about further slowdowns, the trade groups writing today said.
“As we enter the all-important peak shipping season, we continue to expect cargo flows to remain at all-time highs, putting further stress on the supply chain and increasing inflation,” the groups wrote. “Many expect these challenges to continue through the rest of the year. Even with the recent joint statement, supply chain stakeholders remain concerned about the potential for disruption, especially without a contract or an extension in place.”
Although both parties have agreed to avoid shutdowns, experts say that even a slight slowing of cargo flow will affect already fragile supply chains.
“While a full shutdown is the worst-case scenario and both sides are working to avoid that situation, it is likely that the flow of goods through the West Coast ports will slow down. This will cause transit delays, as freight that is being processed at a slower rate won’t be available for truckers,” explained Spencer Shute, senior consultant at procurement and supply chain consulting firm Proxima. “If the slowdown happens immediately, trucking equipment will be out of position, which impacts overall freight rates. The additional delays will create a sense of limited supply, impacting consumer buying patterns.”
That means consumers will shop earlier for holiday purchases, as happened last year. An additional layer of concern: Freight from Shanghai will begin reaching U.S. ports following Covid-19 lockdowns in China, causing a potential surge of volume on the West Coast.
“If negotiations are not completed, there will be limited incentive for the laborers to expedite processing ships coming to port,” Shute also said.
The trade groups that lobbied the president today urged two other steps to keep those negotiations rolling: They asked the administration to remain at the table and negotiate in good faith, and to agree to not engage in “any kind of activity that leads to further disruption at the ports.”
Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.