A Commerce Department advisory committee is poised to ask for quicker mediation response in wake of the West Coast port slowdown that took place less than a year ago.
Industry representatives on a Department of Commerce advisory committee will vote at their regular meeting next month on a recommendation for the federal government to get involved sooner in labor disputes, like the recent one between dockworkers and marine terminal operators at West Coast ports that took almost nine months to resolve, that have boomerang effects on the rest of the economy.
The contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expired in June 2014. Talks stalled and became increasingly rancorous, leading to a series of tactics by both sides that effectively reduced labor and operating hours for cargo handling. This resulted in weeks-long cargo backlogs to the consternation of importers and exporters with crucial goods stranded at ports or their own facilities.
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.
President Obama in early January instructed the Federal Mediation and Conciliation Service to help settle differences at the request of both sides. The impasse was finally broken in late February when Labor Secretary Thomas Perez joined the bargaining process and was able to forge a compromise that gradually allowed the ports to return to normal operations by the summer.
Mike Steenhoek, executive director of the Soy Transportation Coalition, agreed at the June 24 meeting of the Advisory Committee on Supply Chain Competitiveness to draft a letter for Commerce Secretary Penny Pritzker requesting the executive branch determine an earlier engagement point in labor talks before ripple effects spread through the economy.
“While we were appreciative administration got engaged, could the line in the sand be drawn further out so that instead of what we witnessed last year where there was a lot of pain in the economy before the administration got involved, that maybe warning clouds serve as the trigger,” said Steenhoek.
Administration officials at the meeting said that as a general rule the federal government doesn’t intervene with private contractual relationships, but that situation was closely monitored at the highest levels of the White House until the impact on the broader economy became too great to leave the parties involved to their own devices.
“Unions deserve a right to negotiate on their own. It’s not appropriate to step in early in the process,” Nate Lowenthiel, a transportation infrastructure advisor in the White House’s National Economic Council, said.
Steenhoek said the intent of the letter would not be to interfere with the ability of parties to negotiate labor contracts, “but there also needs to be acknowledgement that not all negotiations are equal. If Alex Rodriguez and the N.Y. Yankees are at an impasse on his contract, unless you’re a Yankees fan, who cares? But there are certain constituencies in this country that if they don’t get their relationship right it has a profound effect on a lot of other industries…
“What is the glide path that if we’re X days from a contract expiring and there has been an absence of any kind of progress, then should that trigger any response from the administration? If we start seeing evidence of disruption of the supply chain that should be a signal to ratchet it up,” he said.
The question is whether current statute provides more latitude for federal involvement than the way many today interpret it, Steenhoek added.
The Senate Commerce Committee in late June forwarded a bill aimed at providing more transparency into port performance and identifying potential disruptions before they inflict serious damage on the broader economy. One of the bill’s provisions requires port authorities to submit port metrics to the Department of Transportation, which would report to Congress on a port’s performance three months before a maritime labor contract expires and then monthly to help indicate whether the labor discussions have impacted operations, the estimated economic impact of such disputes and roughly how long it will take for shipments to return to normal. The path for a full Senate vote on the measure remains unclear at this point.
Meanwhile, International Longshoremen’s Association and the U.S. Maritime Alliance, which represents waterfront employers on the East Coast, have already begun talks ahead of the September 2018 expiration of their master contract in an effort to avoid any port disruption.
Industry seeks ground rules for future federal intervention in port-labor disputes
