Industry advisors to the Commerce Department are calling on the government to get involved much sooner when contract talks between dockworkers and terminal operators diminish port productivity.
The U.S. Department of Commerce’s federal advisory committee on supply chain competitiveness is recommending that the executive branch establish trip lines for earlier involvement in any future port labor dispute to avoid economic fallout similar to what happened last winter on the West Coast.
The contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expired in June 2014. Talks stalled and became increasingly testy, leading to union withholding of longshoremen to work shifts and management not ordering labor for night and weekend shifts. The lack of available labor and shorter operating hours resulted in major cargo backlogs that took weeks to clear and severely impacted importers and exporters.
No official tally of the port slowdown’s economic damage has been done, but the costs in spoiled agriculture products, extra storage fees, transportation costs to reroute cargo or use airfreight, and lost sales were at least in the hundreds of millions of dollars and helped contribute to what various estimates say was a 0.2 to 1 point headwind to U.S. GDP growth over the winter months.
“It will better serve the industries we represent, and the overall economy, if the administration, and future administrations, would become more engaged when the consequences of a future negotiation impasse are more modest, rather than severe,” the private sector representatives will tell Commerce Secretary Penny Pritzker, according to a copy of a draft letter agreed to without a formal vote at the group’s meeting in Washington on Thursday.
The nine-month contract dispute was finally resolved in mid-February after Labor Secretary Thomas Perez, in particular, and Pritzker met with the parties and put pressure on them to find a resolution. Their participation followed several weeks of engagement by federal mediators who were ordered by President Obama in early January to help settle the dispute between the ILWU and the PMA.
“We would like to urge the administration, and subsequent administrations, to not allow such a lengthy amount of time to expire before becoming actively engaged in future negotiations between operators and longshoremen at our nation’s various port regions,” said the advisory committee, which is comprised of representatives from retail, manufacturing and logistics companies, port authorities, trade associations and academia.
“We acknowledge that two parties must enjoy the latitude to negotiate the terms of a contract with limited, and ideally no, government interference. However, it is also important to acknowledge that not all negotiations are equal. In some negotiations the consequences of an impasse are confined to the two parties in dispute. In others, the consequences of an impasse extend beyond the parties at the negotiating table and instead reverberate throughout the entire economy,” they said in the letter.
What effect, if any, the letter will have is unclear. Administration officials have previously stated that the federal government generally doesn’t intervene with private contract talks and that premature action could undermine the leverage of unions to achieve their goals.
The advisory committee said it recognized the difficulty of establishing a “fixed line in the sand” for intervening in port contract negotiations, but said a better process needs to be in place so that future disruptions are avoided. Maintaining the reliability of freight transport at ports is especially critical for exporters, the group said, because international customers can easily switch to suppliers from other countries, resulting in a loss of sales and jobs.
Swifter federal response sought in port labor disputes
