Home / News / Ships pile up in West Coast ports in labor fight, threatening supply chain chaos

Ships pile up in West Coast ports in labor fight, threatening supply chain chaos

Jun 11, 2023Jun 11, 2023

Ships are piling up in some West Coast ports, and commercial shipping prices are spiking amid a labor fight between port operators and workers, threatening to trigger a new round of supply chain disruptions that could lead to shortages or higher prices.

The fight is sparking concerns among lawmakers who worry surging container prices could ripple through the economy and hit all sorts of consumer goods in a repeat of supply chain problems following pandemic shutdowns.

"The shippers I know are afraid of what might happen if we shut down our ports," said Rep. Val Hoyle (D-Ore.), a member of the House Transportation and Infrastructure Committee. "People are concerned."

Data from logistics platform Go Comet shows median delay times trending upward this week in several key West Coast ports, including Los Angeles, Seattle and Long Beach, Calif. Wait times at the port of Seattle are now more than a week.

People who study the data say the rates for shipping containers on the West Coast are rapidly rising.

"Container rates for importing 40-foot containers to the United States's West Coast over the past week have jumped 20 percent week-over-week, likely as a result of the anticipated congestion at the ports. This follows a dramatic lull in rates after last year's highs," said Eytan Buchman, who works with the logistics booking company Freightos.

In the port of Oakland, Calif., operations were shut down over the weekend due to a labor strike but resumed Monday "with heavy traffic experienced at the gate," according to German shipping company Hapag-Lloyd.

"Operations continue as normal across the U.S. and Canada with the exception of west coast terminals which were temporarily shut down due to labor action," the company wrote in a regional operations summary on Wednesday.

Negotiations between the International Longshore and Warehouse Union (ILWU), which represents some 42,000 workers across 60 chapters in Pacific ports, and the Pacific Maritime Association (PMA), which negotiates for 70 shipping companies and terminal operators at 29 West Coast ports, are being held behind closed doors.

Workers are organizing work stoppages to pressure management, while operators are accusing them of "disruption tactics."

These include "refusing to dispatch workers to marine terminals, slowing operations, and making unfounded health and safety claims," the PMA said in a statement.

The White House and lawmakers in Congress are paying close attention to the talks and want to see them reach a swift conclusion.

"Acting [Labor] Secretary [Julie] Su and others in the administration are regularly engaging with the parties, encouraging them to stay at the negotiating table and finish their work," White House spokesperson Karine Jean-Pierre said Wednesday.

"The path forward is for the port workers and their employers to resolve the negotiations so that workers get the wages, benefits, and quality of life that they so deserve," she said.

A representative for Sen. Alex Padilla (D-Calif.) said in a statement to The Hill that he's "closely monitoring the developments at California's ports as workers exercise their right to organize," and "he urges both parties to work to reach a fair resolution."

Lawmakers told The Hill that what's fundamentally at issue in the talks now is the level of wages, as opposed to benefits or paid time off, which were at issue in a threatened railroad strike that nearly materialized last year and threatened to interfere with national distribution pipelines.

"They’ve negotiated through some of the most difficult issues and now are onto wages," Hoyle said in an interview on Wednesday.

"When you’re 75 percent of the way through negotiations, it's hard, but they need to get back in the room and focus on getting this done so that it doesn't affect our supply chain."

Transportation and warehousing jobs on average pay a wage of about $29 an hour, according to the Labor Department. Jobs website Glassdoor put ILWU Local 23 longshoreman pay between $22 and $33 an hour, which is below the national average of $33.34.

Local 23 chapter vice president Brock Graber declined to comment on the status of negotiations.

The negotiation on wages was not expected to be this difficult, an aide for a member of Congress from California with knowledge of the negotiations told The Hill. The aide said the wage negotiations are "just the beginning" and that "there's a lot more work to be done."

Rank and file members of the union were not happy about their pay in light of the extra demands that were placed upon them during the pandemic, the aide said.

"ILWU workers risked and lost their lives during the pandemic to ensure grocery store shelves were stocked, PPE was made available, essential medical supplies were reaching our hospitals, and record volumes of consumer goods continued to reach the door steps of American consumers," the ILWU said in a statement released on Friday.

"Despite this fact, from pre-pandemic levels through 2022, the percentage of ILWU wages and benefits continued to drop compared to PMA rising revenues," the union said.

Gross profits were up more than 100 percent for PMA member company Maersk, which netted more than $38 billion in 2022. In 2021, as the economy roared back from the shutdowns during the pandemic, Maersk profits leaped up by more than 200 percent, according to financial data company Macrotrends.

Taiwanese ocean carrier Evergreen Marine Corp., another PMA member, set aside $62.2 million as a reward to its more than 3,100 employees, trade publication Maritime Executive reported in March, a sum "equivalent to 10 to 11 months of salary."

These executive bonuses were enabled by $10.9 billion in 2022 profits for Evergreen, representing a 39-percent rise in profits over the previous year, Maritime Executive reported.

Work stoppages spiked in 2022 as elevated levels of inflation bit into paychecks and increased the cost of living, a phenomenon that was repeated in many dozens of countries all over the world.

Experts in organized labor say that cost of living adjustments which are tied to inflation and executed automatically with federal benefit programs like Social Security, used to be more commonly included in labor contracts but are now something of a rarity.

"During the last period of inflation in the 1980s, employers started reconsidering these 9 or 10 percent annual raises and started making concessions elsewhere. For the auto industry, one of the things they traded for that was profit-sharing," Arthur Wheaton, director of labor studies at the Cornell School of Industrial and Labor Relations, said in an interview.

"They said, ‘We’re not going to give you cost of living, but if we’re making big money and big profits, we’ll give you a part of that,’" he said.

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