If I was to say to you that the two groups that held cargo interests hostage for nearly nine months were more alike than different, would you buy it?
Because the truth is, after months of obstinate negotiations—resolved only when the nation’s labor secretary essentially forced a resolution—the Pacific Maritime Association and International Longshore and Warehouse Union have more in common than either would like to admit.
Both took extreme positions and refused to compromise even after an existing contract had expired. Both were willing to let shippers—paymasters for both—twist in the wind while they haggled over relatively minor details. Minor, that is, for those not at the negotiating table.
The ironic thing is this: we hear so often that ocean transportation costs are a relatively small fraction of shippers’ total costs, especially as the value of goods rise. The PMA and ILWU were, at the end, essentially haggling over pennies relative to the value of all the supply chains they disrupted, particularly in the first two months of 2015.
That’s when things went from bad to acute, when shippers had gone from being perturbed to angry and even desperate.
The tie that will forever bind the PMA and ILWU after this negotiating season is their joint and utter indifference to the effects their petty bargaining had on everyone else—from the major retailer that incurred significant costs to redirect its supply chain, to the small shop owner who couldn’t realistically divert any of his or her cargo, and instead sat with empty shelves.
If the results of a recent survey by American Shipper on long-term cargo diversion to the East Coast hold true, maybe the message will have hit home by the next contract negotiation. In the survey, shippers that use ports on both coasts say they will divert 20 percent of their volume on a long-term basis.
Then the interests behind both the PMA and ILWU might get the message that their joint behavior has resulted in lost cargo, which translates into lost economic activity, and eventually lost jobs.
It’s not terminal automation or Cadillac health plans that should have had the two sides worried—it’s the reality that they both lost complete touch with whom they serve. It will take years to rebuild any trust with the shipper community.
This commentary was published in the April 2015 issue of American Shipper.
