Shippers lobby Biden as dreaded West Coast port labor contract expiry looms

Credit: REUTERS/Lucy Nicholson

By Lisa Baertlein

LOS ANGELES, July 1 (Reuters) - More than 150 local, state and national trade associations implored U.S. President Joe Biden to push for a smooth and swift resolution to West Coast port labor talks ahead of late Friday's expiration of the contract covering more than 22,000 workers.

Groups representing industries from agriculture and apparel to trucking and toys requested that Biden work with the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) employer group to extend the current contract, commit to ongoing good-faith negotiations, and avoid any activity that would cause further disruptions.

"We know the administration understands the economic significance of these negotiations," they wrote in a letter sent to Biden ahead of the contract expiration at 5 p.m. PDT Friday (0000 GMT Saturday).

The contract covering workers at 29 ports stretching from California to Washington state has been on Biden's radar for months and he took the unusual step of meeting with the ILWU and PMA in Los Angeles on June 10.

That is because disruptions at the West Coast ocean trade gateways that handle almost 40% of U.S. imports could roil the nation's battered supply chains, stoke inflation and threaten a weakening economy.

Work slowdown or stoppages at those ports could send transportation costs even higher, exacerbating pressure on a softening economy that is sinking Biden's approval ratings.

"We've never had a White House that is all over these negotiations the way they are now," said Peter Tirschwell, vice president of maritime, trade & supply chain at S&P Global Market Intelligence.

The ILWU and PMA, which declined comment for this report, said in a rare joint statement on June 14 that they were not planning any work stoppages or lockouts that would worsen supply chain logjams.

That matters because when the contract expires, so does its "no strike" clause, Tirschwell said.

The last West Coast port labor contract negotiation broke down in 2015 after nine months of talks. Dockworkers stopped work for eight days, a move that gummed up U.S. supply chains and siphoned an estimated $8 billion from the Southern California economy.

History suggests that an extension is not likely. The union in November rejected a one-year contract extension, saying its members had already granted a three-year extension to the current contract.

Automating the movement of containers at the ports, resulting in fewer jobs, appears to be a key issue in the talks, which have been ongoing since May. While both sides have not identified the issue specifically, they have released dueling studies on the impact of automation and traded barbs in the media.

In an interview with Reuters this week, U.S. Labor Secretary Marty Walsh said he checks in weekly with ILWU and the PMA. They "continually tell me that we're in a good place. It's moving forward," Walsh said.

Meanwhile, wary shippers are not taking any chances. They are routing cargo away from the West Coast to avoid potential labor-related slowdowns, particularly at the nation's busiest seaport complex at Los Angeles/Long Beach that handle nearly $500 billion in cargo annually. That is driving up their costs and contributing to backups at ports in New York/New Jersey, Savannah and Houston.

(Reporting by Lisa Baertlein in Los Angeles Editing by Marguerita Choy)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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