Tentative Labor Agreement for U.S. West Coast Ports

The Pacific Maritime Association and the International Longshore and Warehouse Union announced late on Wednesday, June 14, that a tentative agreement has been reached a year after the prior labor contract expired and after weeks of sporadic labor shortages that were causing disruptions and delays at the U.S. West Coast ports. The tentative agreement, which was reached with the assistance of Acting U.S. Secretary of Labor Julie Su, brings to close 13 months of negotiations providing for a new six-year contract that covers all 29 West Coast ports.

The association representing the employers and the union released a brief statement saying they were pleased to have an agreement so that they can “turn our full attention back to the operation” of the ports. They did not announce the terms of the agreement noting that it still requires ratification by both sides.

The White House sent Acting Secretary Su to San Francisco on Monday, June 12 to meet with both the union and employers’ association. They highlighted her experience having previously been Secretary of the California Labor and Workforce Development Agency from 2019 to 2021 and having previously dealt with both sides of the current negotiations. The Labor Department released a brief statement with Su thanking both sides for their hard work and perseverance saying it “demonstrates once again that collective bargaining – though sometimes difficult – works.”

Reports said that the talks had broken down at the beginning of June as they approached the final issue of wage increases. Su helped to bring both sides back to the negotiations with reports late on Monday that they had agreed to a cooling-off period to stop the labor shortages. The PMA was accusing the union of withholding the dispatching of daily workers.

While the ports of Los Angeles and Long Beach during their monthly updates at the beginning of the week insisted they were open and volume moving, there were growing reports of delays. The Port of Seattle had been forced to suspend container operations last weekend while the Port of Oakland, California had earlier in June also been forced to close and some terminals in both San Pedro Bay ports had periodically suspended operations or closed their trucking gates.

The Marine Exchange of Southern California reported on Wednesday that four vessels rescheduled arrivals with agents for two attributing it to labor issues. Eight vessels in port they said had also reported schedule delays, but four other vessels departed on June 14. Other reports indicated that dwell times were increasing at the West Coast ports.

The Executive Director of the Port of Los Angeles, Gene Seroka, Tweeted a message hailing the agreement which he had repeatedly said was urgent to shippers and managing port volume. He noted the agreement provides “stability and confidence,” while noting the challenge would now be to attract volumes back to the West Coast after shippers and carriers diverted containers to the U.S. Gulf Coast or East Coast ports.

Earlier in the week, Seroka noted the port was operating at only 70 percent of capacity with volumes down approximately 20 percent in May versus the year earlier. While highlighting that volume had increased for three months in a row at the Port of Los Angeles, he estimated as much as 15 percent of the port’s volume had been diverted to other ports due to the uncertainty during the 13 months of negotiations.

The agreement comes at an important time as the U.S. economy appears to be rebounding and retailers were indicating their plans to begin to again increase imports to build inventories after months of slowed activity. Retailers are preparing for the busy selling seasons in the third and fourth quarters of the year. 

It also provides greater stability to the transpacific trade which is also facing the prospects of an ILWU strike in Canada at the end of June which would impact the key ports of Vancouver and Prince Rupert.  The Canadian ports in addition to handling a significant part of Canada’s trade also move containers for U.S. manufacturers, especially in the Midwest. Members of the ILWU of Canada in a nearly unanimous vote authorized a possible strike which could start as early as June 24 if they can not reach an agreement on their contract which expired on March 31.