West Coast Port Strike Update
Bensenville, Illinois - Jul 1, 2014
The American economy is heavily reliant on trade with nations that utilize ports on the west coast. Twelve years ago, a labor dispute closed west coast ports and cost the U.S. economy an estimated $1 billion a day. If a stoppage were to happen now, it would cost an estimated $2 billion per day. Negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) are due to expire at 5:00PM on July 1st. Ports contribute approximately 12.5% of the national GDP, and a lockout would be a severe blow to the economy even if it was for a few days. It would also bring terrible publicity to the unions whose workers make $20 - $45 an hour, and who many in the industry think are already highly overcompensated.
Wages, health care, and safety are the main points of arbitration during the talks. In past negotiations, these issues were usually the most difficult ones to agree upon. However, a new point of discussion could cause even more complications. With the increase in reliance on technology and automation, the workplace is changing for the longshoremen. Jurisdiction is now a key issue the two parties must work together on. Certain jobs are being eliminated and new jobs that require special skills are replacing them. In some situations the ILWU maintains conflicted jurisdictions on the docks with other unions such as the International Association of Machinists and the International Brotherhood of Electrical Workers.
There is also talk of who will pay certain taxes that will come up during the year 2018. The $150 million Cadillac tax is a hot topic that if cannot be resolved during the discussions will carry on to the year 2017. This means that instead of a 6 year agreement, the two unions will only extend current contracts for another three years, further prolonging an agreement and keeping the economy on its heels.
The good news is that ports will likely stay open if an agreement is not reached by July 1st. The bad news is that a work slowdown is very likely. Although it is illegal for unions to organize this type of behavior, after past negotiation extensions, work slowdowns had severely affected port efficiency causing massive delays and costs for shippers who had to re-route shipments.
As the two parties continue negotiations this month, the nation and the world can only sit back and hope that an expeditious agreement is reached. The wellbeing of the American economy may just well depend on it.
About Pactrans Air & Sea, Inc.
Headquarted in Bensenville, IL, and doing business for
nearly 30 years, Pactrans Air & Sea has established itself as one
of the world's leading international logistics companies. Providing a
wide range of services, including: import / export air and ocean
freight, warehousing and distribution, local trucking, trade shows and
product trading / sourcing. Read more about us for more information. We are: CNS (an IATA Co), FMC, NVOCC, MBE and most recently WBE certified organization.