NRF’s Shay calls on ILWU and PMA leaders to start negotiations on new contract

At a time when a new supply chain and logistics challenge arises daily, it bears repeating that as the end of June approaches, another is looming, which could have significant implications for a myriad industry players. .

That challenge is, of course, the impending contract expiration on June 30 between the International Longshore and Warehouse Union and the Pacific Maritime Association (PMA). The ILWU represents nearly 14,000 portworkers in California, Oregon and Washington, with more than 40% of container traffic entering the United States transiting through West Coast ports at the Ports of Los Angeles and Long Beach. , according to industry estimates. The PMA represents shipping lines and terminal operators at 29 ports on the west coast.

Admittedly, this is not the first time that a contract between the organizations has expired. And you don’t have to go back too far to see how acrimonious the negotiations were, because in 2015, in the months leading up to the June 30 deadline, it took the Federal Mediation and Conciliation Service of the United States intervenes to help the parties find a way to reach an agreement on stalled labor negotiations. Additionally, the lingering tension between the parties subsequently resulted in hampered productivity and also contributed to port congestion on the west coast, especially as it led to the 2016 holiday season. The PMA said, at the time, that the state of terminal productivity at the five largest West Coast ports was approaching a stalemate, largely due to what she called the phased closures of the ‘ILWU.

The National Retail Federation (NRF), based in Washington, D.C., is watching this situation closely, especially as the days roll by in the calendar, and is calling on the PMA and ILWU “to begin contract negotiations well in advance of the contract of June 30″. expiry.”

In a letter to ILWU President William E. Adams and PMA President and CEO James McKenna, NRF President and CEO Matthew Shay urged them to begin contract negotiations as soon as possible. Shay explained that the NRF applauds the close partnership that ILWU and PMA have established throughout the pandemic, coupled with the ability to handle the unprecedented increase in freight over the past two years.

“As many expect supply chain disruptions to continue into 2022, contract negotiations are unlikely to result in additional supply chain disruption pressures,” Shay wrote. “We know the key issues for both parties need to be resolved during this contract negotiation and believe the parties should sit down now and not wait to begin negotiations. Both parties should attempt to conclude a contract well in advance of expiration for the benefit of the national economy and to provide necessary certainty for all supply chain players who rely on US West Coast ports. . We further request that you issue a statement committing to enter into meaningful negotiations now and committing to continue negotiations and work without interruption, even if negotiations extend beyond the expiration of the contract. of June 30.

The senior NRF leader went on to note that with West Coast port congestion issues at the forefront, there is a need to ensure negotiations do not subsequently lead to additional congestion issues, especially as the NRF membership will prepare for the peak sailing season of 2022, alongside the time of the expiration of the current contract. Additionally, he observed that additional disruptions will not only affect NRF members, but also other supply chain players who use West Coast ports.

And he didn’t mince words when he explained that a survey of NRF members pointed out that “even the perceived the risk of disruption will force retailers to re-evaluate their use of U.S. West Coast ports, noting that “without a clear commitment to continue negotiations, cargo shifts to other gateways would likely occur even if a disruption never occurs, simply because of the need to mitigate the risk of a disruption.

Brian Whitlock, senior analyst director of Gartner’s supply chain practice, said this contract renewal is significant for two reasons.

“First it was extended in 2017 and was last negotiated in 2015,” he said. “This means the current agreement has lasted seven years without change. Second, this contract renewal comes at a time when US ports are very congested and it is expected to take most of 2022 to recover. If disruptions work occur during these contract negotiations, it will create compounding disruptions that will further reduce supply chain performance and push the port’s recovery into 2023.”

Whitlock went on to comment that over the past year the balance of power has shifted towards labor across all sectors.

“With widespread media attention to shipping delays and impacts on holiday shopping, PMA will have to contend with an American public that knows more about ports today than it ever has. done,” he said. “And during President Biden’s visit to the Port of Baltimore, he encouraged businesses to see the value in creating well-paying jobs. These events put a lot of wind in the sails of the ILWU.

As for the best-case scenario, Whitlock said it would be one in which the PMA reached an agreement with the ILWU before the contract expired, avoiding industrial action or work slowdowns, while retaining their right to automate without union interference. And the worst-case scenario, he said, is that contract negotiations drag on for months past the contract deadline, leading to labor slowdowns and serious traffic jams and backlogs in harbors.

Labor slowdowns, congestion and backlogs are not things we need more of, especially not at a time when the supply chain remains constrained and hampered by a host of events. No one wants a repeat of the last round of negotiations or the redux of 2002, when a ten-day West Coast port closure took the breath out of the economy and resulted in estimated losses of $15 billion. and created a backlog that took several months to clear.

Hopefully the NRF’s wish comes true and the ILWU and PMA come to the table with ideas and compromises to work things out. The supply chain relies on that.

About the Author

Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics management, Modern material handlingand Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine where he covers all aspects of the supply chain, logistics, freight forwarding and material handling industries on a daily basis. Contact Jeff Berman

About Julie Gray

Check Also

Kerry Logistics Network pioneers as the first logistics company to use electric trucks in Hong Kong in a move towards net-zero emissions

HONG KONG SAR – Media OutReach – 11 May 2022 – Kerry Logistics Network Limited …