Ports are open again, but what happened!?
To the great relief of large manufacturers and small retailers alike, activity is picking up again at West Coast ports after several months of delays. Operations slowed significantly while employers and dockworkers unions struggled to come to an agreement on a new labor contract, after the previous contract expired in July.
Work resumed Saturday on the docks after a tentative compromise was reached for a five year contract, although some employers and union members still need to approve the agreement, which will impact 20,000 workers at 29 ports.
Details about the new contract are scarce, but negotiators appear to have found common ground regarding healthcare and truck trailer maintenance. Much of the prolonged conflict seemed to center on the issue of arbitrators, who settle disputes in interpretations of the labor contract. Unions wanted to change the rules to be able to remove a controversial arbitrator. After negotiations, new rules for selecting arbitrators have been drafted.
The tremendous ripple effect of this debacle
With the Long Beach and Los Angeles ports together receiving 40 percent of the nation’s incoming container cargo, shutdowns at the docks had significantly disrupted operations for several large U.S. agricultural, manufacturing, and retail industries. Industries with perishable and seasonal products, such as the food and fashion industries, were hit especially hard.
Slowdowns at the docks drew the attention of both local and federal politicians. Los Angeles Mayor Eric Garcetti accused negotiators of wasting time, and worried that California ports might lose business to Mexico, or to the newly-widened Panama Canal port. Meanwhile, President Obama sent U.S. Labor Secretary Thomas E. Perez to meet with employers and the unions to push for a settlement.
Will business go back to normal?
Despite concerns that frustrated customers might abandon California docks, union representatives seem confident that business will return to usual. Craig Merrilees, spokesperson for the International Longshore and Warehouse Union, points out that “the region has overwhelming inherent advantages,” such as proximity to China, political support, and well-established infrastructure, “that make it likely to continue being the dominant player in international logistics.”
Yet others see long-term infrastructure and procedural problems with West Coast ports that predate this recent conflict, and still need to be addressed in the wake of the new contract. While full time shifts are resuming at the docks for the first time since January, trade experts still predict that it will take several months before operations are running on schedule again. How has your business been effected?