Thursday, February 19, 2015

West Coast Port Slowdown

Cargo ships waiting for days to dock in LA.  Typically there are no wait times.

After nine months of negotiations, West Coast longshoremen and port operators have yet to reach a new contract.  More than half of goods imported to United States arrive at these 29 ports, and after several months of work slowdowns -- for which each side blames the other -- the flow of goods has been interrupted severely.

Some economists have estimated that the port action cost the U.S. one percent of GDP growth in the last quarter of 2014. The situation seems to have worsened considerably since the new year began.

The chart below suggests the effects are worse for exporters than importers, perhaps because many West Coast exports are perishable agricultural products.  Still, given the constant concern about American trade imbalances, this is another bit of unwelcome news.

Some data points:

     -- As of Wednesday, 32 tanker ships sat at anchor in the waters outside the Ports of Los Angeles
        and Long Beach.  There has been no count of shipping cancelled because of the port situation.

     -- At the Oakland port, which recorded year-over-year traffic increases every month in 2014,                 volume was down by 32 percent in January of 2015.

This week the U.S. Secretary of Labor has been visiting negotiators and politicians on the West Coast.  According to a spokesman, he told officials that "further delay risks hundreds of thousands of jobs and will cost American businesses hundreds of millions of dollars."

The Issues

The current slowdown has been gathering steam for months. The ILWU (International Longshore and Warehouse Union) says port operators are calling for fewer workers than are needed to process good through the port.  The PMA (Pacific Maritime Association) says union halls send only half the longshore workers who are requested.

Last weekend the PMA shut ports for the three-day President's Day Weekend.  Current longshore wages range from $35 an hour and up, and apparently include overtime pay for weekend shifts.  The operators seem to have been unwilling to shell out time-and-a-half to people who were working actively to clog the the processing of ships through ports.

In fact, the money issues have been settled in the negotiation, including reported worker raises of 14 percent over three years, and a 10 percent increase in the $80,000 pensions; health insurance copays are already $0.  (In 2013, ILWU benefits were reported to cost $33,400 per covered worker.)

These negotiations have been contentious before.  In 2002 negotiations hit a stalemate, and the PMA shut ports for 10 days.  The Bush administration invoked the Taft-Hartley Act against both parties and threatened to move the ILWU from supervision of the National Labor Relations Board to that of the Railway Labor Act, which would effectively ban strikes as against the national interest.

The threat was not acted upon, and a settlement was reached.  Another contract was negotiated in 2008 without serious conflict.  It is unlikely that the pro-labor Obama administration will put much pressure on ILWU in this year's round, and the options against port operators seem limited.

The final barrier to settlement seems to concern arbitrators, who decide contract issues between labor and port management.  Under current rules, it takes the joint agreement of the PMA and ILWU to fire an arbitrator.   The ILWU wants either side to be able to fire an arbitrator unilaterally.

Given the current level of discord, adopting such a policy would seem to ensure never-ending battles on the waterfront as both parties sought arbitrators sympathetic to their positions.

Next: Stories from the Slowdown

Most of us are used to near-seamless movement of goods back and forth across oceans.  But for people who arrange these transits, the current state of affairs is frustrating.

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