ILWU & PMA Speak About Contract Negotiations

 In Container Shipping & Transport, ILWU, ILWU contract, ILWU Contract Negotiation, ILWU contract negotiations, ILWU Negotiations, international business, International Shipping, PMA, Port Automation, port congestion, Uncategorized

Both the Loadstar and the Journal of Commerce (JOC) report the Pacific Maritime Association (PMA) and International Longshore & Warehouse Union (ILWU) have broken media silence on their negotiations with a joint statement to reassure shippers that both parties are committed to negotiating a new contract without port disruption. One would certainly hope so.

“Cargo operations continue beyond the expiration of the contract. Neither party is preparing for a strike or a lockout, contrary to speculation in news reports. The parties remain focused on and committed to reaching an agreement,” the PMA and ILWU reportedly said.

I say reportedly because the statement does not appear on the PMA’s nor the ILWU’s website. Saying that neither party is preparing for a strike or a lockout is not the same as the parties committing not to execute a strike or lockout. The history of labor slowdowns, port disruption, strikes, and lockouts during contract negotiations along with the contract expiration meaning there’s not an active agreement clause against strikes and slowdowns in place gives shippers and industry professionals plenty of reason to be worried.

Additionally, all the congestion, port disruption, and record-breakingly (yeah, I might have just made up that adverb) high freight rates over the last two years would make disruptions from contentious contract negotiations all the more devastating.

ILWU PMA meet about contract extension

Should Shippers Feel Reassured?

Should the PMA-ILWU statement make shippers optimistic that these negotiations won’t turn costly for them? Probably the most hopeful thing from the statement is that it came from the parties jointly. That shows some cooperation on the part of the union and employers. It’s also something that is somewhat rare during contract negotiations.

Getting this statement is definitely better than hearing news of negotiations being suspended as happened in May. The ILWU requested that suspension, and the union refused to comment afterward. The PMA also didn’t say why the negotiations had been suspended, but it was reported that the ILWU was in no rush to get negotiations for the new contract done.

President Biden Met With PMA & ILWU

On Friday, President Biden did have a sit-down with the PMA and ILWU. Shippers have sent a couple letters to the White House, requesting that the president do so – or at least do something to ensure port disruption like what took place during the contentious contract negotiations of 2014-15 doesn’t repeat itself. The latest such letter was sent last week on Wednesday.

Good on the president for meeting with the dockworker union and its members’ employers on the subject two days after the letter. “Good on the president” isn’t something I’ve gotten to say too much since Joe Biden took up the office.

The PMA and ILWU’s statement makes it clear there won’t be a new contract before the current one expires on July 1st, but we already knew there wouldn’t be. The statement probably didn’t give us any real new information, but at least it reportedly confirmed what the parties discussed with President Biden:

“The parties discussed with the president several issues, including supply chain congestion and their shared commitment to reach a collective bargaining agreement that is fair to both parties.”

PMA’s Posted Negotiations Comments

While the PMA’s website, at the time of this writing, does not share the joint statement made with the ILWU, it does have a popup that reads:

PMA’s negotiations with the ILWU for a new labor contract at the 29 West Coast ports are critically important for the health of jobs, businesses, and communities nationwide. As historic supply chain congestion continues, it is vital that both sides reach agreement without any disruption at the ports. We are proud of our collaboration with the ILWU during this extraordinary period, and hopeful that spirit of cooperation will continue as we pursue a new agreement.

The popup then supplies a link to a section of the website devoted to negotiations. There, you can find a video from PMA’s President and CEO Jim McKenna, in which he gets into the issue of collaboration with the ILWU.

Automation Talk

The above-mentioned video was released just before contract negotiations were about to get underway, and McKenna dedicated a significant amount of time in the video to what is thought to be the most heated issue between the parties: automation.

In fact, these negotiations have long been expected to become contentious over automation.

Here’s what McKenna had to say about automation:

We must modernize our terminals to achieve greater cargo throughput and accommodate growing cargo volumes. This is particularly important in the largest ports where there is no opportunity for physical expansion. Automation allows greater densification at existing port terminals, enabling greater cargo throughput and continued cargo growth over time.

ILWU members overwhelming agreed to automation dating back to 2008. It’s been a contractual right for PMA members for almost 15 years. We have seen through experience over the past 18 months that automated terminals were the most effective at handling historic volumes – while also expanding work opportunities for ILWU members.

… We will meet stringent environmental regulations to protect the health of our workers and the communities where West Coast ports are located. Automation has been – and will remain – an essential tool to reducing emissions and achieving environmental objectives approved by lawmakers in the major ports, particularly the nation’s largest port complex in Southern California.

Contention Over Automation

Spending so long on the topic of automation is significant. There is at least one point made in what McKenna said that the ILWU would take issue with: automated terminals expanding work opportunities for the ILWU. The PMA went public with a study supporting this claim. I haven’t studied this study, but the ILWU did refute the claim of increased ILWU opportunites, calling it a “shell game.”

The union said there might be more jobs at the automated terminals, but they took cargo movement away from the less automated terminals, meaning there weren’t really more job opportunities overall because of automation.

The ILWU, along with its East Coast counterpart – the ILA, has always seen automation as an existential threat. However, both unions have made agreements to allow ports to automate in return for substantial compensation. Dockworkers on both coasts are extremely well-paid with excellent benefits on top. McKenna didn’t fail to bring that up in his video:

We will continue to provide world-class wages and benefits to ILWU workers. Currently, ILWU members earn nearly $195,000 a year on average — roughly three times the U.S. median household income. ILWU members also enjoy fully employer-paid healthcare, generous pension and retirement-savings plans, and pay guarantees.

Despite agreements to allow automation and the excellent compensation they receive, the unions have still fought automation. It’s hard to see the issue not becoming a sticking point during these negotiations. But hopefully, both parties will resist utilizing tactics like slowdowns, strikes, and lockouts and remain at the negotiating table until a new deal is worked out.

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