Port Labor Talks Pose New Complication for Supply Chain

This week, West Coast shipbuilders and shippers will begin high-stakes contract negotiations for a US economy already strained by supply chain disruptions.

The labor talks involve about 22,400 workers at 29 ports, including major facilities in Southern California, which make up the country’s busiest gateway for imported goods. Similar negotiations have been lengthy and contentious in previous years, leading to widespread disruptions and delays in the flow of goods.

Rarely is the risk as high as this year.

Negotiations between the International Coast and Logistics Alliance and cargo handling companies will begin on Tuesday, two years after the supply chain crisis caused by the Covid-19 pandemic and it did. factory production strains, hit retail sales and helped push inflation to a 40-year high.

The parties are scheduled to meet in San Francisco just as US ports are clearing a backlog of container ships and as shipping prices hit record levels that appear to be stabilizing. However, shipping officials say the freight network remains fragile, especially as negotiations are likely heating up and tensions rise as a fresh wave of imports will land at ports. this summer at the start of the peak shipping season.

Jim McKenna, head of the Pacific Maritime Association that will lead labor negotiations on behalf of employers including some of the world’s largest shipping lines, said: If anything disrupts the supply chain any further, it will be very dangerous.

ILWU International President Willie Adams wrote in an open letter Friday that the union seeks “a contract that honors, respects, and protects the good works of Americans and their importers and exporters.” USA”.

Importers of everything from furniture to toys and U.S. exporters of agricultural and other products are facing potential loss, not least because 40% of the goods are imported. US seaborne exports flow through 29 ports affected by the negotiations, but also because of the previous negotiations have led to serious negotiations disruption.

Disagreements between management and labor in two of the last three contract negotiations, in 2002 and 2014, caused commodity delays that cost individual manufacturers and retailers thousands of dollars in losses. million dollars in revenue.

Shipbuilders are expected to demand higher wages, better benefits, and limits on automating cargo handling facilities. Industry officials and observers said the union entered the negotiations with a stronger stance than usual.

Union workers have stayed afloat throughout the pandemic and handled record volumes of cargo. Foreign-based shipping lines, which own multiple cargo handling facilities at ports, cannot endure poverty after raking in billions of dollars in profits in a market where supply continues to exceed supply. bridge. The White House, which has the authority to intervene if negotiations reach an impasse, is also considered labor-friendly.

Few industry officials expect negotiations to be resolved by the time the current contract expires on July 1. But there is optimism that an agreement can be reached by the end of the year. largely due to the intense focus on negotiations.

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In previous labor negotiations, the federal government began to pay attention to the negotiations after they had been underway for months, industry officials said. By contrast, Brian Ossenbeck, a senior analyst for transportation and logistics at JPMorgan Chase & Co., noted that the Biden administration has focused on ports for more than a year, issuing executive orders and promoting push logistics companies and shippers to change operations to ease congestion.

This year’s talks also took place in a context unlike any in recent memory.

The breakdown of the 2014-15 negotiations was marked by accusations of stalled work, and dozens of container ships that pulled back at the California ports of Los Angeles and Long Beach during the dispute. This year’s negotiations began with more than 30 ships waiting offshore due to supply chain bottlenecks, although this is down sharply from the more than 100 ships that were supported at the beginning of 2022.

Shipping customers have become accustomed to dealing with port congestion over the past two years, so many have adopted mitigation strategies, ranging from holding lots of inventory to shipping through East and Coast ports. Bay. Some shippers have applied those lessons by ordering goods for the back-to-school and holiday seasons earlier or by moving goods to alternative ports of entry.

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https://www.wsj.com/articles/port-labor-talks-pose-new-complication-for-supply-chain-11652011201?mod=pls_whats_news_us_business_f Port Labor Talks Pose New Complication for Supply Chain

Edmund DeMarche

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