Dockworkers have finally resolved a nine-month labor dispute, allowing West Coast ports to get back to business as usual. But it’s not exactly business as usual, with a backlog from vessels waiting offshore that could take up to two months to clear.
At the Union’s dispatch hall in Wilmington, California, nearly 1,500 jobs were posted for Saturday’s night shift, in comparison to the standard 800 to 1,000, according to the local union’s vice president.
Said Jon Slangerup, CEO of the Port of Long Beach, “They’ve turned the firehose on. [The union and the Pacific Maritime Association] are committed to digging out of this as quickly as possible.”
The new, five-year contract was reached on Friday following the imposition by U.S. Labor Secretary Tom Perez of a deadline for a deal. The expedited deal averted a potential shutdown of 29 ports that could have cost the United States economy up to $1.9 billion per day. West Coast ports, which account for 43.5 percent of United States trade, have been operating on reduced capacity since October due to the labor dispute.
With the huge backlog now on their shoulders, there’s an urgent need to get things back to normal. Said Adolph Negrete, a dockworker of 29 years at the Los Angeles port, “There’s all kinds of work to get to all these ships out there. I will be able to work six or seven days in a row if I want to.”
Shipping freight rates started climbing
Prior to the settlement, the strike had begun to push up shipping freight rates, with delays in taking on and offloading new cargo making container ships unavailable for new orders.
Several dozen container ships waited off the West Coast ports of San Diego, San Francisco and Los Angeles, many of them having waited over a week to enter the port to take on new cargoes or unload, creating a backlog.
According to a leading broker, “The strike is affecting a lot of vessels. There’s a lot of delays and this is pushing up panamax (container) rates as fewer ships are available for new orders.”
With the cargo delays spreading throughout the United States’ economy, President Obama dispatched Labor Secretary Tom Perez to California to attempt to help broker an agreement between the dockworkers and shipping companies.
More about the dispute
The negotiations between the West Coast ports and the Union began upon the expiration of the contract for 20,000 port workers back in July. The Pacific Maritime Association accused the International Longshore Workers Union of creating a work slowdown, turning shipping containers into garbage cans and harbors into parking lots.
The repercussions were already being felt nationwide before the settlement was reached. Auto workers, for example, were running out of tasks. Last week, Honda stated that it would “stop or reduce production on multiple days” at six facilities over the next week because of “parts shortages.” Said Spokesperson, Mark Morrison, the company is running out of parts and transmissions. Similarly, Subaru and Toyota said that they would need to modify their operations as well.
And it’s not just the auto industry; furniture manufacturers were also losing business. In fact, any company whose products didn’t make it through the ports was having trouble finding independent transporters to take their goods on the next leg of their trip, according to Marianne Rowden, President and CEO of the American Association of Exporters and Importers.
The North American Meat Institute expressed that its industry was losing approximately $85 million each week while the meat and poultry sat in freezers awaiting transport overseas. In the dairy industry, the situation was “pretty dire” according to Alan Levitt of the U.S. Dairy Export Council.
Said Levitt, “In some cases (producers are) re-routing shipments through Gulf and East Coast ports, but that’s costly and adds to the delivery time. There are no good alternatives.”
The settlement is tentative and is still awaiting approval from dockworkers along the West Coast. Management and the Union will not yet release details of the agreement until it is presented to members.