Negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) took a surprising turn earlier this week as the two sides came to an agreement on healthcare benefits, long believed to be one of the main sticking points in the contract dispute. These labor negotiations have been characterized as peaceful when compared to the prior disputes, which saw a coast-wide shut down in 2002, and port strikes and terminal slowdowns in 2008. However, that is not to say that there has been no ill-affect, as many shippers preemptively diverted their supply chains in the event of a major disruption.
Health care was considered the main issue of these negotiations, because the so-called Cadillac plans enjoyed by union members will incur roughly $150 million annual in tax under Obamacare, which neither side wants to pay for. With this portion resolved, many believe that the negotiations could come to a final agreement very shortly. How this healthcare issue was resolved has yet to be revealed publicly, but it seems unlikely that they would have made a press announcement if they were postponing this issue until 2018 when the new taxes kick in. It is also unclear whether the final agreement will be for only 3 years, or if it will be a 6-year contract like the prior two. We will continue to provide regular updates on the ongoing negotiations, stay tuned.