The Pacific Maritime Association and the International Longshore and Warehouse Union have reached a tentative agreement, preventing more costly impacts to Americans.
The agreement needs to be ratified by both parties first, but would create a new six-year contract covering over 22,000 workers at all 29 West Coast ports. The two parties have been in negotiations for a new collective bargaining agreement since July 2022.
“We are pleased to have reached an agreement that recognizes the heroic efforts and personal sacrifices of the [International Longshore and Warehouse Union] workforce in keeping our ports operating,” Pacific Maritime Association President James McKenna and International Longshore and Warehouse Union President Willie Adams said in a joint statement. “We are also pleased to turn our full attention back to the operation of the West Coast ports.”
The two parties avoid further halts to operations along the 29 West Coast ports, which could have hurt the U.S. economy. According to Southern Illinois University Associate Professor of Operations Management Gregory DeYong, any delay in port operations can be expensive, especially if products are stuck at the port, where storage fees continue to be charged. These fees are roughly several hundred dollars per container.
“[The fees] are not insignificant, but when you’re talking about a $5,000 container cost, adding on another $1,000 in delay costs hurts and can be the profit margin for some businesses,” DeYong said in a phone call to The Center Square.
If the International Longshore and Warehouse Union had decided to go on strike, DeYong estimates that a full shutdown of ports would have cost in the range of $500 million per day. However, he notes that if there was a strike, it would probably end quickly with the U.S. Federal Government getting involved due to the ports’ significant economic impact.
The tentative deal between the two parties was reached with assistance from Acting U.S. Secretary of Labor Julie Su.
Current volume levels throughout West Coast ports are up compared to 2019 and 2020, but DeYong said that more shippers have been slowly moving away from the 29 ports to the East Coast since the 1990s.
“I think in about 2000, the West Coast ports were handling the majority of imports, so 55% plus imports were coming in West Coast ports – they’re now around 40%,” DeYong said. “Obviously the whole pie has been growing so maybe it’s not as obviously painful as you might think, but that certainly causes some issues.”
Port operations throughout the West Coast have seen halts since March 2023. Most recently, the Seattle Port halted operations. DeYong notes that while ports were technically open, the union workers were not staggering their breaks, preventing ports from running continually during the day. The halt in port operations could take away approximately two hours from an eight-hour workday, creating limited capacity.
The biggest imports that come into the West Coast ports include furniture, auto parts, clothing, in addition to raw materials such as plastic resin.
The most critical exports going out of the U.S. are agricultural products, including fresh and frozen meat. DeYong said meat producers have actively rerouted to avoid West Coast ports to prevent a loss in value of goods being exported.
One silver lining of the halt in port operations: U.S. consumers may see cheaper fresh meat at grocery stores due to an increase in supply in the short-term. However, DeYong notes that once there is an increase in supply, the production slows, leading to a quick rebound in prices.
