With the June 30 date for renewing the West Coast longshoremen's contract less than three months away, jittery importers and exporters are wondering whether they should start shifting cargo to other ports now in anticipation of a possible strike, or wait to see how negotiations progress before making costly changes to cargo routing.
The contract with the International Longshore and Warehouse Union (ILWU) covers some 14,000 dockworkers at ports in California, Oregon, and Washington.
A recent National Retail Federation poll of its members found that most respondents expect labor slowdowns but not a strike. Still, "there's a lot of unease about what's about to happen," said Jonathan Gold, NRF's vice president, supply chain and customs policy. Gold made those remarks during a panel presentation at the recent Coalition of New England Companies for Trade (CONECT) 18th Annual Northeast Trade and Transportation Conference in Newport, R.I.
That uncertainty and concern has been exacerbated by ILWU's declaration that it will not begin negotiations with the Pacific Maritime Association (PMA), which represents carriers, terminal operators, and stevedores, until the middle of May. "We all know it takes longer than [six weeks] to get a deal done," Gold said.
ILWU's late-in-the-game strategy will hurt beneficial cargo owners (BCOs), who must make arrangements to reroute shipments long in advance of their arrival. But it could also backfire on the union. If importers shift cargo to non-ILWU ports before the contract's expiration date to minimize the risk of supply chain disruptions during the peak shipping season, which begins in July, there's no guarantee that cargo will immediately shift back as soon as a dispute has been settled. And some of that business may never come back.
"Why not settle early and keep discretionary cargo on the West Coast?" Gold said.
Speaking on the same panel, John Nardi, president of the New York Shipping Association, pointed out another reason to get a contract signed early. If importers and exporters shift cargo to East Coast ports, the additional volume will exacerbate existing capacity constraints. "Even a moderate rise in cargo volumes will be significant" and is likely to lead to logjams at container terminals, said Nardi, whose organization represents carriers and terminal operators in the New York/New Jersey area. "This needs to be planned out now to prevent congestion."
The NRF and other business groups have urged the ILWU and PMA to begin negotiations right away, rather than risk a strike that would harm the less-than-robust U.S. economy. In an April 14 letter to both organizations, NRF President and CEO Matthew Shay also asked them to publicly commit to "maintaining service" and continuing negotiations if they do not reach an agreement by June 30.
