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Viewpoint: How do you put value on today’s longshore workers?

That’s the billion-dollar question for both German and US ports

The German trade union Ver.di and the Central Association of German Seaport Companies (ZDS) will enter into their sixth round of negotiations on Tuesday. (Photo: Shutterstock)

Labor strikes and slowdowns at ports in Germany, Antwerp, Belgium, and Rotterdam, Netherlands, are crippling trade and could trigger more logistical inflationary pressures for U.S. importers and consumers.

The German trade union Ver.di and the Central Association of German Seaport Companies (ZDS) will enter into their sixth round of negotiations on Tuesday. After warning strikes surrounding the subject of wage increases, the congestion that has been created is so solid that it will take at least three months for the pileup to be cleared out of the ports, according to Andreas Braun, Europe, Middle East and Africa ocean product director for Crane Worldwide Logistics.

“Ocean carriers have diverted to Antwerp and Rotterdam but this has now created congestion at those ports,” Braun said. “A domino effect of congestion has been created and delays at other European ports and this is expanding over into the U.S. East Coast. There is no avoiding it.”

Antwerp’s union recently had a one-day strike protesting for a better wage in the face of rising inflation. The rails in Rotterdam are currently crippled under miles of piled-up containers as a result of labor slowdowns and the rails being shut down because of jammed yard capacity at the German ports of Hamburg and Bremerhaven.

According to the CNBC Supply Chain Heat Map, the majority of pipes of trade within the European port system are clogged — from vessel availability to trucking to container availability and processing.

Source: CNBC Supply Chain Heat Map

Braun explained the delays have U.S. importers now adding four to five weeks into their calendars when looking to book a vessel. The rail congestion has also created a dislocation of containers, which is impacting availability.


Dislocation of containers was one of the reasons behind the push-up in rates during the pandemic and Braun said it could happen again. These costs are passed over to the consumer, which adds to inflation.

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“The issue with the empties starts with the importing vessels which are delayed and then you have the ports that are congested,” explained Braun. “Normally, you would get your containers out of the hinterland but that is a challenge because of rail congestion. Capacity constraints can put pressure on rates.”

US labor and trade

In the United States, logistics managers are holding their collective breath to see if the International Longshore and Warehouse Union and the Pacific Maritime Association will stick to their joint statement that they are not planning any strikes or lockouts. One of the issues being discussed is a fair wage, just like what is being negotiated in Europe. While the location of the workers may be different, the subject of pay is the same.

Both unions and employers are negotiating in an environment in which the employers (ocean carriers) have been making record profits and the longshoremen who moved the mountains of containers that generated those profits want a fair wage. As we all know, the subject of a “fair wage” is viewed very differently depending on what side of the negotiation table you sit on.

Automation will also be another key piece to this negotiation. Simply put, the PMA wants to further develop automation to improve port efficiency. The ILWU says it’s a jobs killer.

Looking at the CNBC U.S. Supply Chain Heat Map, which highlights port efficiency, peak season volumes can be seen in the anchorage times, and the dwell time for import containers is ticking up in Oakland, California, and Seattle. But don’t be fooled by the green in this category for the ports of Los Angeles and Savannah, Georgia. They are nearing the data metric to flip to moderate congestion. 

Source: CNBC Supply Chain Heat Map

As a result of West Coast port congestion, logistics managers have been consistent in their port diversification moving containers away from the West Coast. But remember, only so much can be moved. Approximately 40% of the nation’s trade enters and leaves these 29 West Coast ports. Seventy-four percent is from the ports of LA and Long Beach alone.

According to the National Association of Manufacturers, any strike or stoppage would cost the U.S. economy $500 million a day. The National Retail Federation sent a letter signed by 150 local, state and national trade associations to President Biden urging the administration to continue to work with the parties to reach an agreement.

“The only way to resolve these issues is for the parties to remain at the bargaining table and negotiate in good faith,” the letter stated.

The stakes are high in the closely connected world of trade. We have inflationary pressures building as a result of labor impasses in Europe. Unfortunately, the memories of the 2002 and 2014 lockouts and slowdowns in the U.S. have not faded in the minds of logistics managers. The economy now is facing a whole new set of challenges. The fate of more inflation that would be created by any type of slowdown is now in the hands of the ILWU and PMA.

Lori Ann LaRocco

Lori Ann LaRocco is senior editor of guests for CNBC business news. She coordinates high profile interviews and special multi-million dollar on-location productions for all shows on the network. Her specialty is in politics, working with titans of industry. LaRocco is the author of: “Trade War: Containers Don’t Lie, Navigating the Bluster” (Marine Money Inc., 2019) “Dynasties of the Sea: The Untold Stories of the Postwar Shipping Pioneers” (Marine Money Inc., 2018), “Opportunity Knocking” (Agate Publishing, 2014), “Dynasties of the Sea: The Ships and Entrepreneurs Who Ushered in the Era of Free Trade” (Marine Money, 2012), and “Thriving in the New Economy: Lessons from Today’s Top Business Minds” (Wiley, 2010).
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