One week ago, the near future of port operations got stuck in limbo, as the contract between about 70 shipping employers and 22,000 dockworkers expired. The International Longshore and Warehouse Union (ILWU), which represents the laborers, says there are no plans for work stoppages or lockouts at the 29 affected West Coast ports. At the time of this writing, operations continue as normal. However, many experts fear a strike or slowdowns are only a matter of time.
“The entire industry is on pins and needles,” one manufacturer told The New York Post. “This is a looming crisis, and we’re hearing and reading nothing about any real progress.”
A major sticking point in the contract negotiations revolves around automation at ports. Workers are concerned that automation will cost jobs. Conversely, leaders at many U.S. ports believe automation will help them keep up with shipments from Asia, where automation is more standard. Some recent logjams have led to 100-vessel-long backups.
The Pacific Maritime Association (PMA), a nonprofit that represents cargo carriers and terminal operators, contends that automation would increase employment by enabling ports to create higher-value jobs. A PMA report states that automated terminals have boosted efficiency at the Ports of Los Angeles and Long Beach. Between January 2020 and February 2022, throughput rose to an average of 510 twenty-foot equivalent units (TEUs) per acre at the two ports, compared with 350 TEUs per acre at San Pedro Bay’s conventional terminals. The automated terminals also are processing containers up to twice as fast.
However, the Economic Roundtable argues that 572 full-time jobs were lost at the Long Beach Container Terminal and the Trans Pacific Container Terminal in Los Angeles. Furthermore, the ports were 7-15% less productive than non-automated facilities.
Dockworkers also are seeking raises, which they believe shipping lines can afford — especially as overseas freight firms continue to enjoy record profits.
If negotiations drag on too long, about 40% of U.S. imports would face even more bottlenecks, escalating shipping prices, and trucking and freight interruptions. Other concerns include further driving up inflation and panic-buying as consumers worry about shortages.
More than 150 U.S. trade associations — representing agriculture, automotive, chemicals, food, home, natural products, travel, technology, trucking and logistics, retail, and more — have urged President Biden to push to immediately extend the current contract. “We continue to expect cargo flows to remain at all-time highs, putting further stress on the supply chain and increasing inflation,” their letter states.
President Biden met with both sides of the negotiations in Los Angeles last month in the hopes of encouraging progress. Days later, he also signed the Ocean Shipping Reform Act, which aims to crack down on skyrocketing international ocean shipping costs and ease supply chain backlogs. Hopefully this will lead to some results, but in the meantime, shippers are routing cargo to East Coast ports. Of course, this is adding to both the holdups and the expense.
Solving the toughest problems
For those of us in supply chain, this is yet another situation that challenges planning and forecasting. But we do have resources and support systems. ASCM’s global community features exclusive groups for members to examine the latest challenges. The platform also features a wide variety of on-demand educational opportunities, including webinars and microlearnings. And if you have advice and insights to share, consider volunteering for a committee, taskforce or even the board of directors. When you help lead ASCM, you’re on the forefront of our mission to create a better world through supply chain excellence.
