Negotiations for the West Coast port labor contract took longer than expected, causing tensions to rise. Over the past two weeks, work disruptions started impacting ship schedules and container dwell times. However, it seems that the potential significant consequences for the supply chain have been avoided as a deal has finally been reached.
Late on Wednesday night, the Pacific Maritime Association (PMA), representing the terminals, and the International Longshore and Warehouse Union (ILWU), representing the workers, announced a tentative agreement for a new six-year contract. No specific details of the agreement were disclosed, and it is still subject to ratification by both parties.
Acting Labor Secretary Julie Su played a crucial role in facilitating the agreement, according to statements from the ILWU and PMA. Su traveled to San Francisco and met with the parties on Monday to help broker the deal.
James McKenna, the President of the PMA, acknowledged the efforts and sacrifices made by the ILWU workforce in keeping the ports operational during the pandemic and supply chain crisis. ILWU President Willie Adams stated that the union will now shift its focus back to the efficient operation of the West Coast ports.
The agreement's timing was crucial as it prevented disruptions during the peak season. This outcome was beneficial for all parties involved. The Biden administration avoided political backlash from pre-holiday congestion headlines, the ILWU prevented reputational damage caused by holding up Christmas cargoes to negotiate higher wages, and the PMA averted losses in port productivity during the peak season, resulting in increased terminal profits.
Volumes heading to the West Coast have been increasing in line with seasonal patterns before the pandemic. In May, the Port of Los Angeles handled 409,150 twenty-foot equivalent units of imports, showing a 19% increase from April and a 64% increase from the low point in March.
As of Monday, there were 58 container ships en route from Asia to the ports of Los Angeles and Long Beach, compared to 46 ships a month earlier and 47 ships two months ago.
Gene Seroka, Executive Director of the Port of Los Angeles, reported that the port is currently operating at approximately 70% capacity. He attributed 30% of the shortfall to macroeconomic issues, while the other half was due to cargo being diverted to East Coast and Gulf Coast ports due to labor concerns at the West Coast ports.
Seroka expressed optimism about the future, stating that if a labor deal is reached soon and the economy remains stable, the port will have a strong second half of the year.