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Latest ILWU job actions further energize WC diversions
US West Coast port disruptions that lasted a week as of Wednesday have rewarded BCOs for their foresight in diverting freight imports to the East and Gulf coasts.
Ports on the East and Gulf coasts have invested significantly to handle growth, are customer-focused, take fluidity seriously, and have experienced virtually no labor disruption since the late 1970s.
The PMA recently stated, “The ILWU’s coast-wide work actions since June 2 are forcing retailers, manufacturers and other shippers to ship cargo away from the West Coast in favor of ports on the Atlantic and Gulf coasts. Much of the diverted cargo may never return to the West Coast.”
Since its earliest days, the ILWU has been proud of its willingness to stand up to employers. Its longstanding willingness to engage in disruptive actions has enabled the union to secure lucrative wages, health care, and pensions from ocean carriers and marine terminals.
The logic of carriers was that this was a cost of doing business. Longshore labor is expensive, but disruptions are more costly. One twist to the current scenario is the degree to which that holds true. Ocean carriers earned historic profits in 2021 and 2022 because cargo has come to a halt.
Difficult to predict timeline for resolution
It’s impossible to predict how long the negotiations will go on. Some predict that it is only a matter of horse trading before a deal is closed now that core economic issues are on the table. Others believe that there are astronomical differences between what the two sides want to achieve.
The gap is definitely wide. The union says its members deserve generous compensation – a doubling of current wages – for putting themselves at risk during the pandemic. However, the ocean carriers who dominate the PMA are staring at an unforgiving environment. Analysts predict that rates are “on a downward trend that will mirror the 2012-2016 period that culminated in the Hanjin Shipping bankruptcy in 2016.”
SoCal ports navigate vessel backlogs after ILWU job action
Cargo-handling productivity at the ports of LA, LB, and Oakland returned to normal Thursday for the first time in a week. However, the Southern California gateway is contending with a vessel backlog because of job actions. Additionally, crane productivity at the ports of Seattle and Tacoma remained much lower than normal.
The ILWU and PMA met again on Thursday to try to finalize a new contract for West Coast dockworkers, 13 months after the negotiations began. The ILWU has engaged in sporadic job actions over the past week to pressure the PMA. These actions resulted in port disruptions.
The union dispatched sufficient labor to the ports of LA and LB on Thursday. However, 47 vessels were backlogged before the first shift began working. ILWU locals refused to dispatch sufficient lashers for several days. As a result, delays began to increase significantly.
31 of the ships have been delayed for at least a week. The remaining 16 have been delayed for at least four days. One source said the backlog should be cleared relatively quickly if sufficient lashers are dispatched.
ILWU is now dispatching sufficient labor
Terminal operators in LA and LB said they were receiving sufficient labor Thursday. A spokesperson for the Port of Oakland said all terminals were operating normally Thursday. However, the port had seven vessels backlogged due to disruptions earlier in the week.
Crane productivity in Seattle and Tacoma was far less than normal Wednesday night and Thursday. A spokesperson for the Northwest Seaport Alliance said three vessels were at anchor on Thursday.
Sources said negotiators are under pressure to close the gap between the union and employers over wage proposals. The ILWU is seeking a ~100% increase in hourly wages over six years. However, the PMA is offering a wage increase in the low single digits.
About O’Neill Logistics
O’Neill Logistics is a leading third party logistics provider. We operate in California, Savannah, New Jersey. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.
Please reach out to us if you have any questions or need assistance with your logistics solutions!
