Bloomberg News

Longshoremen Contract Threatens U.S. West Coast Port Trade

June 23, 2014

Business groups are urging longshoremen and their employers to avoid a dispute that could cripple ports along the West Coast and affect billions of dollars in commerce.

A six-year pact between the Pacific Maritime Association and the International Longshore and Warehouse Union, which represents about 20,000 dock workers at 29 West Coast ports, expires June 30, both sides said in a joint June 4 release. Negotiations began in May. The ports account for about half of all U.S. maritime trade and more than 70 percent of imports from Asia, according to the association.

A failure to agree and a resulting halt to shipments will have “serious economy-wide impacts,” a coalition of organizations representing U.S. manufacturers, farmers, wholesalers, retailers, distributors, and other groups wrote in a May 9 letter to union President Robert McEllrath and association President James McKenna.

“The potential for disruptions in the flow of commerce at West Coast ports is creating uncertainty in a fragile economic climate and forcing many businesses to develop contingency plans that come at a significant cost to jobs and our economic competitiveness,” according to the letter.

Lousy Timing

Companies are moving goods early and making plans for alternate ports, said Jonathan Gold of the Washington-based National Retail Federation, a trade group representing members including Wal-Mart Stores Inc. (WMT:US), McDonald’s Corp. (MCD:US) and J.C. Penney Co. (JCP:US)

The timing is critical because retailers are gearing up for back-to-school sales as manufacturers, farmers and other businesses have time-sensitive shipments, Gold said.

“We can’t afford to have a shutdown and a disruption like we had in 2002,” Gold said by phone.

That year, an agreement wasn’t reached until about Thanksgiving after a 10-day lockout, the Associated Press said.

Both sides have said they are unlikely to agree on a contract before the current one expires and will continue negotiating after it does, the AP reported today.

Talks are progressing and “it’s a good sign that everyone is continuing to meet and take the process seriously,” said Craig Merrilees, a union spokesman.

Keep Rolling

While some companies can make contingency plans for shipping disruptions, about 20,000 truckers are dedicated to hauling cargo from the ports, said Chris Shimoda of the California Trucking Association in Sacramento.

“No one can afford not to work right now,” Shimoda said.

A 2012 strike by clerical employees at the ports of Los Angeles-Long Beach hobbled the nation’s largest port complex, affecting an estimated $1 billion of cargo a day and idling thousands of workers without pay.

About 1 million tons of cargo are shipped through West Coast ports each day, and in 2013 longshore workers, clerks and foremen were paid $1.39 billion, according to the San Francisco-based Pacific Maritime Association, which represents cargo carriers and dock employers at West Coast ports.

To contact the reporter on this story: Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Alan Goldstein


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