West Coast Dockworkers to Discuss Contract Extension

It was recently announced that International Longshore and Warehouse Union (ILWU) will consider a vote during their upcoming meeting on August 10-12 in San Francisco regarding whether to discuss extending their current contract with the Pacific Maritime Association (PMA).  The current contract is scheduled to expire on July 1, 2019. 

The ILWU is the labor union representing dockworkers at ports on the West Coast of the United States, Hawaii, and Alaska.  The PMA represents shipping lines and port operators.

We are encouraged by this development and strongly support any step that will result in a more long term contract between the two parties.  Such a contract extension will provide greater predictability of the supply chain for those industries, including agriculture, that depend upon West Coast ports.

In late 2014 and early 2015, a severe and widespread slowdown at West Coast ports resulted in a significant disruption for many industries importing and exporting from the region.  Since bulk soybean and grain exports along the West Coast utilize terminals that operate under a separate agreement and contract with the ILWU, last year’s disruption did not significantly impede bulk agricultural exports.  However, soybean and grain exports via container from the West Coast were effected.  Perhaps more detrimental to agriculture was the impact on U.S. meat exports, which are exported via refrigerated container and, due to their perishable nature, cannot withstand significant delay along the supply chain.  The domestic livestock industry is our most important customer.  Any harm absorbed by the livestock industry will be felt by those soybean and grain farmers producing the food the animals consume.  The West Coast port disruption was such an example.

The previous contract between the ILWU and PMA had expired in July of 2014.  During the months following the contract’s expiration, the level of productivity at the ports continued to decline to the point where the service levels were exceedingly low in late 2014 and early 2015.

The ILWU and PMA finally agreed to a new contract in February of 2015. The agreement stipulated that the new five year contract would be made retroactive to the expiration date of the previous contract.  As a result, the expiration date of the current contract is July 1, 2019.

The service disruption at our West Coast ports diminished our reputation as the most reliable exporter in the global marketplace.  It has also been the concern of many industries, including agriculture, that the current détente between the ILWU and the PMA will be temporary - particularly with the current contract expiring in a few short years.  It is therefore welcome news that the ILWU may consider commencing negotiations with the PMA to extend their contract.

While the West Coast is a prominent and irreplaceable link in our logistics chain, it is not the only option for many industries.  The recent expansion of the Panama Canal, the increased utilization of the Asia to East Coat route via the Suez Canal, and expanded export terminals along the West Coast of Canada have provided needed competitive pressure on the West Coast.  Both the ILWU and the PMA recognize that their customers will not passively hope the two sides will resolve their differences without any disruption.  Industries and companies, in agriculture and beyond, continue to explore diversifying their supply chains so that fewer eggs are in the West Coast basket.  If the ILWU and PMA desire to preserve their position in the global economy, providing greater predictability for those who utilize West Coast ports would be a welcome first step.

Source: Mike Steenhoek, Executive Director - Soy Transportation Coalition