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West Coast Port Negotiations Intensify

Jun 28, 2022

It doesn’t matter the industry or sector in which one operates, businesses throughout the U.S. continue to feel the economic impacts of the increasingly fractured supply chain. Due to various factors—such as rising fuel costs, rapid inflation and elongated shipping times—the costs that comprise moving any product or material continue to escalate rapidly.

Though a new concern facing the U.S. that could compound these existing challenges is the upcoming negotiation between two major shipping and labor entities on the West Coast.

Overview of Bargaining Talks

The negotiations, which started on May 10, 2022, are between the International Longshore Warehouse Union (“ILWU”), which employs 22,000 employees, and the Pacific Maritime Association (“PMA”), which has 29 ports across the West Coast. Both groups have participated in this collective bargaining since the 1930s.

Talks are anticipated to take place daily and last until July 1, 2022, which is when the current agreement is set to expire. The negotiations in 2002, 2008 and 2014 all exceeded the deadlines, with the longest overage being eight months in 2014.

During the bargaining, the two parties will discuss topics such as avoiding work disruptions, offering best-in-class employee benefits, safety protocols, technology to drive efficiency in ports, and ESG regulations. According to the PMA, full-time ILWU workers are already receiving average wages approaching $195,000 annually.

Another issue being heavily debated is the PMA’s commitment to introducing automated systems to its marine ports and terminals. The ILWU argues that automation eliminates jobs, creates a greater cybersecurity risk for port operations and does little to improve efficiency. 

The Bottom Line

Servicing some of the most significant ports within the U.S., the PMA’s operations account for nearly 40% of imports on the West Coast. With shipping profits continuing to rise to record numbers, especially amid the pandemic, ILWU workers are in an advantageous bargaining position.

Shippers, consumers and political figures alike are expressing their concerns about the talks and whether our supply chain can handle a halt in operations. Many of these parties have publicly expressed their concerns to the White House, which has intervened in this dispute in the past.

As the conversations continue, businesses and consumers are already feeling the pressures of extended shipping times and increased freight costs. Any slowdowns or stoppages of port operations will only exacerbate these issues on a global scale.

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Blair Robbins

Blair Robbins is an Audit Partner with more than 20 years of public accounting experience.

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