The time is now for American shippers, especially those bringing significant volumes of goods in containers through West Coast ports from Asia, to consider contingency plans if the International Longshore and Warehouse Union and their employers represented by the Pacific Maritime Association should fail to negotiate a new labor contract before the existing one’s expiration on June 30, 2014.
Sure, there are plenty of observers among the labor and carrier professions who will tell you not to worry. It’s too far down the road. The two parties will sort out their differences without upheaval. The days of labor lockouts, like the one in 2002 on the West Coast that lasted 10 days and resulted in an economic loss of as much as $10 billion to the U.S. economy, won’t happen again, they’ll say, because the issues that caused the event have been worked out and no longer apply. Isn’t the peacefully negotiated 2008 contract between the ILWU and PMA enough proof?
That’s naïve thinking. U.S. dock labor, especially the ILWU, has a long history of fighting hard for what it wants and if that means putting the brakes on commerce to get it, then so be it. In fact, recent times have shown the West Coast union’s members tend to be feistier than their East Coast brethren in the International Longshoremen’s Association. In fact, they’ll even fight another union if they feel their turf is being invaded.
With this knowledge, shippers shouldn’t wait until the throes of the contract negotiations early next year to start planning their U.S. freight strategy. This means talking with liner carriers and non-vessel-operating common carriers in advance of the spring service contract season about their thoughts on West Coast dock labor negotiations and what they will do to best serve your interests in the event of a waterfront disruption and help avoid having your most important freight tangled up in a mess.
If you’re currently routing all your Asia-origin cargo through the West Coast, then now is the time to figure out how much of that volume can be routed through East Coast ports in 2014. Some large shippers learned this valuable lesson during the 2002 West Coast labor lockout — don’t put all of your cargo through one U.S. coast. Know there are options, such as all-water service to the East Coast via the Panama or Suez canals.
If nothing happens and the ILWU and PMA amicably sign a new contract, that’s wonderful. The risk management preparations will not have been in vain, because it’s these types of exercises that keep the logistician on his or her toes and vital to the overall organization. If an actual disaster does strike the supply chain — whether manmade or natural — your company will be the one better prepared to respond and recover.
Waterfront risk management
