Since the ILWU and PMA—at the West Coast ports—began negotiating for a new contract in May, both sides have expressed consistent optimism about the eventual and uneventful signing of a new contract.
However, as we are entering the 11th week since the previous contract expired on July 1, previous optimism is being replaced by a renewed sense of concern.
While officially the ILWU and PMA have agreed to not discuss the negotiations publicly, sources close to them have been reporting that little progress has been made over the last few weeks. While there were no signs of work stoppage or strike through the end of July, there have been recent actions that cause concern.
These have included:
- Dockworker refusal to work in the automated area of Pier 400 in Port of Los Angeles.
- Refusal to work a specific vessel in Tacoma Port.
- Rumored work slowdowns at Husky Terminal in Tacoma.
Now, a new wrinkle threatens to accelerate worker action. Last week, unionized security guards that work most of the LA-Long Beach Ports voted to authorize a strike, though no date was set. Should a strike of security guards occur, it is possible that dock workers would not cross the picket line, essentially shutting down a large amount of the port’s facilities.
This flurry of activity and change in outlook comes at an interesting time. Throughout the first half of 2022, inbound containers to West Coast ports declined as importers re-routed cargo to East Coast ports in preparation for West Coast labor issues.
Combined with a drop in container demand, LA-Long Beach container flow is currently as good as it has been for nearly two years. Considering the precipitous container rate decline, especially to the West Coast, there was a sense that East Coast ports could see some much-needed relief with bookings returning to their West Coast counterparts.
But renewed fears of labor strife could put a halt to this and leave East Coast and Gulf ports such as New York, Savannah, and Houston, to deal with alarming congestion for the foreseeable future.
Whether the threat of significant or long-term action has truly increased, is difficult to discern. Also, it is undetermined what role the Biden Administration may play if talks continue to sour.
However, it cannot be denied that the level of uneasiness surrounding the talks has approached its highest peak since the negotiations began, and genuine concern is starting to replace the cautious optimism that was previously felt.
Mohawk Global will continue to monitor the situation as it develops.