Almost everyone in the world of freight knows of the chaos that has occurred (and is occurring) in ocean freight during 2021. Many ships are at anchor near a number of U.S. ports and have also been unable to dock at times at Chinese ports as well. As described by FreightWaves Market Experts and reported by FreightWaves editorial staff, ocean freight has been in peak season almost the entire year.
The worst backups have been at U.S. West Coast ports, where most of the ships from China discharge their cargoes. While the ports are doing their best to clear the backlog of ships and cargoes, the situation has not improved significantly. The Biden administration has urged the Port of Los Angeles to work 24/7 and The Washington Post has reported that the administration is considering calling out the National Guard to help clear the ports.
About 19 years ago there was also a backlog of ships and cargoes on the West Coast. However, it was a very different story in the fall of 2002.
West Coast ports closed; longshoremen locked out
In the spring of 2002, negotiators for the Pacific Maritime Association (PMA), the port operators and shipping lines on the U.S. West Coast, and the International Longshore and Warehouse Union (ILWU), which primarily represents dock workers on the West Coast, Hawaii and in British Columbia, Canada, began negotiations on a new contract.
The PMA sought to introduce new “computer technology, including scanners, sensors and bar coding, to make cargo-tracking faster and more efficient.” However, the ILWU opposed the proposal, stating that the new technology would cost the jobs of longshore clerks. Also, the PMA had proposed cutting back on employer-funded medical benefits; the ILWU sought to maintain the healthcare coverage as well as seeking increased wages and pensions.
Unfortunately, the ILWU and PMA had not agreed on new terms when the existing contract expired on June 30, 2002. Day-to-day extensions meant that the old contract remained in effect until September 1. However, no agreement had still been reached between the two sides.
Longshore workers continued to work without a contract until September 27. On that day, the PMA shut the ports and locked out the longshoremen. The PMA accused the workers of engaging in a work slowdown. ILWU leaders countered, stating that the workers were following safety precautions. The union pointed out that five longshoremen had died on the job to-date in 2002. Further, the ILWU characterized the lockout as a management ploy intended to have President Bush intervene.
It was the first major work stoppage on West Coast docks since the 1971 ILWU strike that closed the ports for 130 days, the longest strike in the ILWU’s history.
With the ports closed, container ships were unable to unload, crowding the West Coast harbors. Drayage chassis and port-side trains sat idle. Perishable cargo spoiled; retailers were concerned they could not build inventories for the holiday shopping season. Business leaders urged President Bush to invoke the Taft-Hartley Act, which allows the president to request a court order temporarily ending a work stoppage that threatens the economy by imposing an 80-day cooling-off period, during which work continues.
Negotiations at an impasse
President Bush first appointed a board of inquiry that was led by former Labor Secretary Bill Brock. Its charge was to report to the president regarding the damage caused by the port shutdown. In the early 2000s those ports were handling $300 billion in cargo annually. In part, the board reported, “We have no confidence that the parties will resolve the West Coast ports dispute within a reasonable time.”
U.S. Department of Labor Secretary Elaine L. Chao sought to negotiate a 30-day contract extension as a means to reopen the ports. While the ILWU agreed to the extension, the PMA did not, stating that it “feared that the longshoremen would engage in a work slowdown.”
In addition, Joseph Miniace, PMA president, said, “A 30-day extension, while we believe it would be a good short-term solution, clearly does not answer the questions of what happens in the long-term. We have been negotiating for five months without a solution.”
A number of union leaders praised the idea of a 30-day contract extension; it showed that the Bush administration was heeding union concerns and seeking to avoid invoking the Taft-Hartley Act.
However, when the PMA disagreed with the extension, Bush administration officials made the decision that the only option was to seek an injunction.
By that time the lockout had lasted 11 days. On October 8 President Bush sought a court order to end the PMA’s lockout of 10,500 longshoremen. Administration aides and spokespeople said that the president was reluctant to seek the court order, but that he “feared that a continuation of the shutdown would undermine the nation’s sputtering economic recovery.” A number of economists estimated that the lockout had cost the economy more than $10 billion.
“The crisis in our Western ports is hurting the economy,” President Bush said at a Rose Garden press event. “It is hurting the security of our country, and the federal government must act. Americans are working hard every day to bring our economy back from recession. This nation simply cannot afford to have hundreds of billions of dollars a year in potential manufacturing and agricultural trade sitting idle.”
The Bush administration sought a court order under provisions of the Taft-Hartley Act to open the docks and send the ILWU back to work. Judge William Alsup of Federal District Court in San Francisco issued a temporary injunction on October 9 that ordered the ports reopened immediately.
Passed by Congress in 1947, the Taft-Hartley Act allows the president to seek injunctions against strikes and lockouts that “imperil the national health or safety.” President Bush was the first president to successfully invoke the emergency provisions of the Taft-Hartley Act since President Nixon sought to stop the 1971 ILWU strike.
The politics of the situation
There were political ramifications to President Bush’s action. Leaders of the ILWU and other unions were against invoking the Taft-Hartley Act, stating such injunctions undermined labor’s power in contract disputes.
For example, an International Brotherhood of Teamsters spokesman said, “We’re extremely disappointed. The whole strategy of locking out the workers and urging the president to invoke Taft-Hartley was clearly an employer strategy to get around negotiating a contract with these workers.”
The AFL-CIO also denounced the president’s move. Richard Trumka, who at that time was the organization’s secretary-treasurer, said, “The PMA locked the workers out, contrived a phony crisis and then gets rescued by the administration. They’re getting their way and have the weight of the government behind them.”
Some political advisers thought invoking the Taft-Hartley Act could mobilize union members against Republican candidates in the midterm elections.
However, many business groups had communicated with the Bush administration, seeking an injunction. They were concerned about the shutdown’s potential to damage the economy. The business groups also pointed out that the amount of money separating the two sides was tiny compared to the damage the dispute was doing to the nation’s economy.
After President Bush invoked the Taft-Hartley Act, Tracy Mullin, president of the National Retail Federation, said, “The President has shown political courage and leadership. He has put national security and the economy first.”
Results, ramifications and reality
The West Coast ports reopened on October 9. However, it took several weeks to clear the backlog of cargo.
Meanwhile, negotiations on a new PMA-ILWU contract continued. The court-ordered cooling-off period was scheduled to end on December 27. Observers were concerned that the dispute would remain unresolved and that either a strike or another lockout would take place at that time. However, both sides had agreed to use Peter Hurtgen, head of the Federal Mediation and Conciliation Service, to mediate the issues. He and the AFL-CIO’s Trumka, an experienced labor negotiator, were given credit for helping resolve the bitter dispute.
The negotiators developed a tentative agreement on a new contract in late November. Both PMA and ILWU claimed the new contract was a “win” for their side. The PMA won the right to introduce the new cargo-tracking technology.
Meanwhile, the union won a number of key points. Roger Boesflug, president of ILWU Local 23 at the Port of Tacoma, termed the contract “the richest contract we’ve ever negotiated.” ILWU members received a 58% increase in their employer-funded pensions. They also received a pay increase of $3/hour over the six-year contract. ILWU members’ full-time salaries were already among the highest of any union workers in the West. With overtime, longshore workers could earn $100,000 or more annually. In addition, the ILWU members retained their full employer-paid health benefits.
While the ILWU agreed to the PMA’s technology changes, the new contract ensured that all the longshore clerks employed at that time would keep their jobs until they chose to retire. In terms of the union’s control of jobs (most important to union leaders), the ILWU “not only retained jurisdiction over the clerk jobs, but won agreement that some terminal and rail-planning jobs that were previously non-union would become union positions.”
The new contract was put to a vote by the ILWU in January 2003. Nearly 90% of the union members who voted approved the contract.
Since 2002 more new technology has been introduced in ports around the world. Almost all phases of port operations are aided by technology. And what of the ILWU, which opposed containers when they were introduced and most new technologies since then? According to reports, there were only about 10,500 ILWU members working on West Coast docks in 2002. By 2019 there were 15,000. Their average salary that year was $171,000…
Author’s note: Thanks to FreightWaves’ Mark Solomon for suggesting this as a topic for FreightWaves Classics.