Letter from the Editor

By Peter Tirschwell

Shippers wonder if the acrimony of West Coast labor relations will become a feature on the East and Gulf coasts .

Over several months beginning last November when the International Longshoremen ’ s Association ( ILA ) first mentioned the possibility of a strike — an innocuous reference in an unrelated press release — a realization slowly dawned on shippers that a sea change was occurring on the US East and Gulf coasts .

If ports operated by ILA labor were for decades a dependable alternative to those reliant on the ILA ’ s perpetually disruptive West coast counterpart , the International Longshore and Warehouse Union ( ILWU ), that assumption no longer holds true .

The assumption of labor peace , demonstrated over the course of 13 peaceful contract negotiations since 1977 , the year of the last coastwide strike , was one of the key factors — along with demographic shifts and the 2016 expansion of the Panama Canal — that led importers of goods from Asia to divert significant volumes from the West Coast to ports along the East and Gulf coasts .

As every West Coast contract negotiation since the late 1990s was met with disruption on the docks and delays to cargo , the consistently peaceful waterfront along the East and Gulf coasts served as a reminder to shippers that a viable alternative to the West Coast exists , and they took advantage .

The diversions were so predictable during the most recent disruptive West Coast negotiations that the Pacific Maritime Association ( PMA ) called it out in June 2023 in response to “ coordinated and disruptive work actions ” by the ILWU as the contract was being negotiated .

“ The ILWU ’ s repeated disruptive work actions at strategic ports along the West Coast are increasingly causing companies to divert cargo to more customer-friendly and reliable locations along the Gulf and East coasts ,” the PMA said .

The message of labor peace on the East and Gulf coasts wasn ’ t just an impression ; at industry conferences at Savannah , Charleston and other ports , ILA dockworkers took the microphone when shippers were on stage , pledging support for their cargo and promising continued reliability . Such statements would never be heard on the West Coast .

Now , even though the strike was suspended after three days when employers increased their offer to a 62 % wage increase over the term of a new six-year contract , shippers believe something more profound has changed .

Just prior to the strike , Jonathan Gold , the vice president of Supply Chain and Customs Policy at the National Retail Federation , said even the threat of a work stoppage “ will have an impact on the confidence that retailers have in labor stability at those ports .”

“ Retailers have diversified their supply chains over the years , and we expect some to re-evaluate their use of certain ports moving forward , especially for discretionary cargo ,” Gold said .

It wasn ’ t just the mounting concern about the possibility of a strike that left the impression of a changed labor landscape . The dispute over jurisdiction of crane driver and yard worker jobs at Southeast ports , which led the new Hugh K . Leatherman Terminal in Charleston to be all but shut down three years after it opened in 2021 , sent tremors that labor stability was no longer guaranteed .

Contributing to the impression of shippers of an altered landscape on the East and Gulf coasts was how the contract negotiations played out this year , or more appropriately , didn ’ t . The ILA walked out of negotiations with the United States Maritime Alliance in June and never returned to the table ; even the terms of the tentative deal that ended the strike last week were mediated entirely through Biden administration officials , not face-to-face with the USMX .

For 40-plus years the ILA and USMX resolved their issues at the bargaining table , forging a shared commitment to stability that was understood by shippers watching the relationship from the sidelines and making supply chain decisions accordingly .

Thus , even for carrier executives with long experience in dealing with the ILA , the inability to return to the table despite repeated invitations , which ultimately led USMX to file an unfair labor practice case with the National Labor Relations Board , was wholly unfamiliar . Carriers being repeatedly demonized by union officials as “ greedy ” — among other adjectives — was also unfamiliar , further reinforcing the notion that the landscape had changed .

Shippers are now wondering if the acrimony that has long characterized labor-management relations on the West Coast will become a permanent feature on the East and Gulf coasts as well . That possibility will be a contributing factor in internal corporate discussions over issues such as outsourcing .

Certainly , the next contract negotiation will be watched much more carefully than it was in the past and likely will prompt diversions that would never have been needed in prior years .

email : peter . tirschwell @ spglobal . com .

4 Journal of Commerce | October 21 , 2024 www . joc . com