Industry groups ask White House to intervene in West Coast port labor dispute
Slowdowns spread from Pacific Northwest to Southern California ports, exacerbating cargo backlog in Los Angeles and Long Beach; holiday merchandise not at risk, but impact on U.S. economy could be huge, groups warn.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
For the first time in 12 years, the White House has been asked to intervene in a labor-management dispute that threatens to cripple
every West Coast seaport from Seattle to San Diego.
A coalition of more than 100 industry
associations sent a letter yesterday to President Obama urging the federal government to step
into contract negotiations between the International Longshore and Warehouse Union (ILWU), which represents dockworkers at 29 U.S. West Coast
ports, and the Pacific Maritime Association, which represents employers such as ocean carriers and terminal operators. Even a five-day port shutdown
would cost the U.S. economy approximately $2 billion a day, the groups said in the letter. They urged the president to encourage both parties to
begin working with a federal mediator, and to exercise his authority to intervene under the Taft-Hartley Act should there be a strike or
lockout.
The last such labor action at West Coast ports, a 10-day lock-out in October 2002, cost the economy an estimated $1 billion a day. That crisis
was considered more serious for holiday deliveries because it occurred earlier in the cycle than the current situation.
ILWU members have been working without a contract since July 1 while negotiations continued. Through the summer and most of fall, it had been
business at usual at the ports. But last week trouble emerged at the ports of Seattle and Tacoma, when the union refused to dispatch skilled
labor such as yard crane operators, and slowed down the pace of other operations. Productivity, measured in container moves per hour, dropped by
about half at both ports; cargo backlogs ballooned, and Tacoma sent longshore gangs home yesterday morning, said Sue Coffey, a Port of Tacoma
representative attending the Nov. 6 Coalition of New England Companies for Trade (CONECT) Northeast Cargo Conference in Foxboro, Mass.
The ILWU yesterday took similar actions at Los Angeles and Long Beach, which together handle some 40 percent of the nation's containerized
imports. Philip Sanfield, a spokesman at the Port of Los Angeles, said port congestion has remained essentially the same at the San Pedro port
complex, the country's busiest. As of mid-day Friday, there were 12 vessels sitting at anchor at the Ports of Los Angeles and adjacent Long
Beach, according to Sanfield.
At yesterday's CONECT conference, speaker Michael DiBernardo, director of business development at the Port of Los Angeles, did say that in
addition to the union's failure to dispatch the necessary number of skilled workers, dockworkers there have been slowing their pace by "working
to rule." He cited examples such as driving below speed limits and conducting more thorough and time-consuming chassis inspections than the
contract specified—"since they don't have a contract, they say they don't have to follow those provisions," he said. DiBernardo told
attendees that the labor problems "are not going to be fixed today or next week." When pressed by an audience member for something more specific,
he responded, "We are hoping to see something by Thanksgiving."
There's no mystery about the timing of the ILWU's alleged slowdowns, according to some observers. CONECT's Washington counsel, Peter
Friedmann, who also leads the Agriculture Ocean Transportation Coalition, noted that the Los Angeles/Long Beach development occurred almost
immediately after the mid-term elections. The union is taking advantage of the opportunity to worsen the already huge backlog at those ports,
caused by a surge of import cargo and a shortage of drayage drivers and container chassis, that has been building for months, he said.
"The problems in the Pacific Northwest are due solely to ILWU's negotiating tactics. Southern California's problems are due to a combination
of ILWU's actions and too much cargo," he said.
Friedmann said in a subsequent phone call that it's hard to predict whether Obama, now a lame duck whose party took a drubbing in the mid-term elections, will use the Taft-Hartley Act to intervene in the dispute. "You have to be willing to take on people ... I don't know that he has an appetite to take on labor," he said. If the president does do anything, Friedmann suggested, it could be something informal,
such as bringing both sides together to talk.
THE BEST-LAID PLANS ...
There has been some concern about the potential impact of the labor slowdown on the holiday shopping season, a major driver of U.S. economic
activity. But National Retail Federation Vice President, Supply Chain and Customs Policy Jonathan Gold said in an e-mail to DC Velocity
that most holiday merchandise is already in retailers' hands. The slowdown is affecting normal replenishment deliveries and deliveries of early
spring merchandise, Gold said.
"The industry started deploying their contingency plans earlier this year, even before the negotiations began. ... This was especially true
when we saw the heavy congestion at the Canadian ports, which impacted rail service," Gold said. Retailers are looking at all options to ensure
they get their cargo and merchandise to the store shelves, Gold said, adding that "congestion issues aren't limited to LA/Long Beach, as a lot of
other ports are also facing issues."
That fact is making it harder for importers to carry out alternative plans in either the U.S. or Canada. At the CONECT conference, a logistics
manager for a mid-size importer with a warehouse near Seattle and another in Illinois said she tried bringing Chicago-bound containers through
the Port of Prince Rupert in British Columbia, but chassis shortages and intermodal service backlogs there had made that alternative untenable.
To mitigate risk, she split cargo between Pacific Northwest and Southern California ports. With Seattle, Tacoma, Los Angeles, and Long Beach
jammed, her company currently has 48 inbound containers either en route to or currently held up in those ports, she said.
Because her company's biggest customers, Wal-Mart Stores, Inc. and Target Corp., assess hefty fines for late deliveries, the logistics
manager said she's considering airfreighting critical orders. Another audience member, who works for a major international freight forwarder,
said that demand for trans-Pacific air cargo services had suddenly jumped within the last few weeks and that much of that additional demand was
coming from importers that usually bring in merchandise via ocean. Inbound airfreight rates on suddenly busier routes are climbing, making the
airfreight alternative even more costly than usual, he said.
The Port of Oakland is one of the few West Coast ports that says it has no congestion issues and can accommodate diverted vessels. However,
that advantage may disappear if the ILWU decides to take action there, too.
A move by federal regulators to reinforce requirements for broker transparency in freight transactions is stirring debate among transportation groups, after the Federal Motor Carrier Safety Administration (FMCSA) published a “notice of proposed rulemaking” this week.
According to FMCSA, its draft rule would strive to make broker transparency more common, requiring greater sharing of the material information necessary for transportation industry parties to make informed business decisions and to support the efficient resolution of disputes.
The proposed rule titled “Transparency in Property Broker Transactions” would address what FMCSA calls the lack of access to information among shippers and motor carriers that can impact the fairness and efficiency of the transportation system, and would reframe broker transparency as a regulatory duty imposed on brokers, with the goal of deterring non-compliance. Specifically, the move would require brokers to keep electronic records, and require brokers to provide transaction records to motor carriers and shippers upon request and within 48 hours of that request.
Under federal regulatory processes, public comments on the move are due by January 21, 2025. However, transportation groups are not waiting on the sidelines to voice their opinions.
According to the Transportation Intermediaries Association (TIA), an industry group representing the third-party logistics (3PL) industry, the potential rule is “misguided overreach” that fails to address the more pressing issue of freight fraud. In TIA’s view, broker transparency regulation is “obsolete and un-American,” and has no place in today’s “highly transparent” marketplace. “This proposal represents a misguided focus on outdated and unnecessary regulations rather than tackling issues that genuinely threaten the safety and efficiency of our nation’s supply chains,” TIA said.
But trucker trade group the Owner-Operator Independent Drivers Association (OOIDA) welcomed the proposed rule, which it said would ensure that brokers finally play by the rules. “We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations. As FMCSA noted, broker transparency is necessary for a fair, efficient transportation system, and is especially important to help carriers defend themselves against alleged claims on a shipment,” OOIDA President Todd Spencer said in a statement.
Additional pushback came from the Small Business in Transportation Coalition (SBTC), a network of transportation professionals in small business, which said the potential rule didn’t go far enough. “This is too little too late and is disappointing. It preserves the status quo, which caters to Big Broker & TIA. There is no question now that FMCSA has been captured by Big Broker. Truckers and carriers must now come out in droves and file comments in full force against this starting tomorrow,” SBTC executive director James Lamb said in a LinkedIn post.
The “series B” funding round was financed by an unnamed “strategic customer” as well as Teradyne Robotics Ventures, Toyota Ventures, Ranpak, Third Kind Venture Capital, One Madison Group, Hyperplane, Catapult Ventures, and others.
The fresh backing comes as Massachusetts-based Pickle reported a spate of third quarter orders, saying that six customers placed orders for over 30 production robots to deploy in the first half of 2025. The new orders include pilot conversions, existing customer expansions, and new customer adoption.
“Pickle is hitting its strides delivering innovation, development, commercial traction, and customer satisfaction. The company is building groundbreaking technology while executing on essential recurring parts of a successful business like field service and manufacturing management,” Omar Asali, Pickle board member and CEO of investor Ranpak, said in a release.
According to Pickle, its truck-unloading robot applies “Physical AI” technology to one of the most labor-intensive, physically demanding, and highest turnover work areas in logistics operations. The platform combines a powerful vision system with generative AI foundation models trained on millions of data points from real logistics and warehouse operations that enable Pickle’s robotic hardware platform to perform physical work at human-scale or better, the company says.
Bloomington, Indiana-based FTR said its Trucking Conditions Index declined in September to -2.47 from -1.39 in August as weakness in the principal freight dynamics – freight rates, utilization, and volume – offset lower fuel costs and slightly less unfavorable financing costs.
Those negative numbers are nothing new—the TCI has been positive only twice – in May and June of this year – since April 2022, but the group’s current forecast still envisions consistently positive readings through at least a two-year forecast horizon.
“Aside from a near-term boost mostly related to falling diesel prices, we have not changed our Trucking Conditions Index forecast significantly in the wake of the election,” Avery Vise, FTR’s vice president of trucking, said in a release. “The outlook continues to be more favorable for carriers than what they have experienced for well over two years. Our analysis indicates gradual but steadily rising capacity utilization leading to stronger freight rates in 2025.”
But FTR said its forecast remains unchanged. “Just like everyone else, we’ll be watching closely to see exactly what trade and other economic policies are implemented and over what time frame. Some freight disruptions are likely due to tariffs and other factors, but it is not yet clear that those actions will do more than shift the timing of activity,” Vise said.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index indicating the industry’s overall health, a positive score represents good, optimistic conditions while a negative score shows the inverse.
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."