Shippers are angry, but will overcome with solutions

   To say that American shippers are angry as hell with West Coast dock labor, along with their terminal employers and the liner carriers, is an understatement.
   The International Longshoremen and Warehouse Union and Pacific Maritime Association have been negotiating a new contract to replace the one that expired on July 1 with little transparency to shippers. That has created angst about potential supply chain interruptions, while work slowdowns orchestrated by the union since Halloween have exacerbated ongoing port congestion.
   “The arrogance and selfishness is unbelievable,” Peter Friedmann, executive director of the Agriculture Transportation Coalition, told American Shipper in late November, barely able to control his disgust. “Wonder how the ILWU guys will enjoy watching their kids flipping burgers for a living—all because their fathers destroyed the West Coast and their chance to be longshoremen.”
   “This is irresponsible and unprofessional behavior on the part of the ILWU,” added Bruce Carlton, chief executive officer for the National Industrial Transportation League. “The union’s leadership is turning a blind eye on the consequences of their passive-aggressive tactics on millions of others throughout the U.S. who will be negatively affected by their actions.”
   Indeed, shippers have spent the last half of 2014 collectively spending millions of dollars over and above what they would normally allocate on their supply chains for contingency plans.
   The reality is that the ILWU doesn’t care about the harm it has caused to shippers, as long as it gets its way in the contract and continues to push back on terminal automation. 
   “Union workers have the right to bargain for their best interests, but the slowdown harms companies and consumers who have nothing to do with the contract negotiations. . . . Employers and union leaders are both responsible for finalizing a contract as soon as possible,” the Seattle Times said in an editorial.
   Meanwhile, liner carriers share a large portion of the blame for the festering congestion issue.    
   Carriers have attempted to present themselves as victims of the West Coast congestion and yet it was them that contributed to the chassis mess, the introduction of larger ships to the transpacific, and service confusion with proposed new alliances. From the shippers’ perspective, carriers’ threats to administer port congestion surcharges of as much as $1,000 per 40-foot container has added insult to injury. 
   We would not want to be in the carrier executives’ shoes when service contract negotiations start with the shippers this spring. They will have a lot of explaining to do.
    A dozen years ago, shippers reoriented their supply chains in reaction to the 10-day port shutdown when terminal operators locked out workers when both sides were unable to reach agreement on a multi-year contract. West Coast ports lost some market share to the East Coast and places like Prince Rupert, Canada. Lost trade translates into less economic activity and jobs. It seems the parties haven’t learned history’s lessons. 
   A big question going forward is whether shippers will act on their frustration by permanently diverting more of their cargo traffic to non-West Coast gateways. That will be easier to do when the expansion of the Panama Canal is completed in 2016 and the all-water route becomes viable for the latest mega-size vessels. Of course, port congestion isn’t unique to the West Coast, but the worst conditions are in the ports of Los Angeles and Long Beach.
    The important thing now is to get a contract done as quickly as possible while accepting the necessity of technology to improve efficiency. If a shorter three-year deal is necessary until the federal government clarifies how future excise taxes on certain health care plans will be implemented, then so be it. But get a deal done so both sides can then work together on joint solutions to the ongoing productivity issues.

This editorial was published in the January 2015 issue of American Shipper.