U.S. West Coast Update: Amid Worsening Congestion, Lockout a Possibility

As reported by multiple media outlets, the Pacific Maritime Association (PMA) held a press conference on February 4 to outline its latest contract offer to the International Longshore and Warehouse Union (ILWU). The proposed five-year agreement includes a commitment to continued 100% healthcare coverage for dockworkers (including the so-called Cadillac tax under the Affordable Healthcare Act), a 3% annual increase in wages, and an 11% increase in annual pension payments to USD 88,000 per year.

According to Jim McKenna, President & CEO of the PMA, his organization has made a “comprehensive and generous” offer that is also “as far as it can go.” PMA also released a YouTube video in which McKenna comments on the current offer and on the state and cause of West Coast congestion (to view the video, please visit: https://www.youtube.com/watch?v=FKv-T2zP7w8 ).

The Marine Exchange of Southern California reports that, as of the morning of February 5, 18 container vessels sit at anchor outside the Ports of Los Angeles and Long Beach. McKenna noted that an additional 24 ships are either anchored or offshore at the ports of Oakland, Tacoma and Seattle. He added that the PMA needs “to decide how much longer we are going to pay longshore workers to work slowly. These slowdowns are having the same result as a strike, except the workers are still getting a paycheck…We are truly close to gridlock…At some point the system will collapse under its own weight.”

When asked specifically about the potential of a PMA lockout, McKenna was noncommittal. But he did note that, at the current rate of regression, the system could “grind to a halt” within “five days, seven days, two weeks.”

In a statement issued after the PMA press conference, the ILWU characterized itself as “trying to keep dock employers at the negotiating table to finish an agreement that is ‘extremely close.’” ILWU President Robert McEllrath added that the union has “dropped almost all of our remaining issues to help get this settled — and the few issues that remain can be easily resolved.”

When asked about a potential lockout, McEllrath commented that “Closing the ports at this point would be reckless and irresponsible. This is the second time in recent memory,” he added, “that the employers have threatened to close ports at the final stages of negotiations. The union has not engaged in a port strike over the coast longshore contract since 1971, 44 years ago.”

A lockout could potentially lead President Obama to invoke the Taft-Hartley Act, which would institute a mandatory 80-day cooling off period between the negotiating parties. In 2002, President Bush turned to Taft-Hartley after a PMA lockout had reached its tenth day. Invoking Taft-Hartley, however, would not guarantee improved productivity by dockworkers or solve the potential state of gridlock that McKenna is predicting.

Walker SCM will continue to monitor this situation and keep our customers apprised of the latest developments. If you have questions related to specific shipments, please feel free to contact your Walker representative.