Retailers nervous over new supply chain issues amid port labor negotiations

Shoppers walk out of a Missoula store with plastic bags full of merchandise. (Current Martin Kidston/Missoula file)

LOS ANGELES (CN) — The start of contract talks this week between West Coast port terminal operators and the powerful longshoremen’s union has retailers fearing that a stalemate at the bargaining table will lead to further disruption in the delivery of goods on the shelves.

The ports of Long Beach and Los Angeles, the nation’s largest container port complex, have already seen record numbers of imports from Asia arriving in the first three months of the year. Retailers imported as much goods as they could for, among other reasons, to build up stocks ahead of possible slowdowns or closures at ports.

“Retailers are preparing for any potential disruption due to West Coast port labor negotiations,” said Jonathan Gold, vice president of supply chain and customs at the National Retail Federation, in a statement last week.

“NRF has previously encouraged the parties to stay at the table and not engage in disruption if a new contract is not reached by the time the current agreement expires on July 1.”

Negotiations between the Pacific Maritime Association, representing terminal operators and shipping carriers, and the International Longshore and Warehouse Union, representing 15,500 registered dockworkers, began Tuesday in San Francisco.

The talks come as West Coast ports are under close national scrutiny due to the US supply chain collapse in 2021 that left dozens of ships idling offshore, unable to unload cargo.

The causes of the disruptions were many, ranging from an unprecedented volume of imports driven by US consumer spending on household goods because the Covid pandemic kept people from traveling and going out, to shortages of labor and equipment in the trucking, railroad and warehousing industries. However, the stacking of containers in ports has also sparked new discussions about terminal automation.

The PMA fired a shot at the union’s bow earlier this month when it released a study highlighting the need for automation for west coast ports to stay competitive, facilitate cargo growth and employment and to reduce greenhouse gas emissions. This press release, so close to the start of contract negotiations, did not go unnoticed and the union reacted quickly.

“It is evident that the PMA is releasing its report as we enter negotiations,” Frank Ponce De Leon, a member of the ILWU coastal committee, said in a statement last week. “However, much of what their report claims is contrary to many previous reports on automated terminals that cite job losses and weakened efficiencies. Ultimately, automation has killed port jobs. . »

Jim McKenna, the chief executive of the Pacific Maritime Association, said at a press conference with the Port of Los Angeles last week that there was no particular significance behind the timing of the study’s release. and that the only reason it was published this month was that it was finished.

The dispute between terminal operators and the union over the implementation of new technologies in ports goes back decades. In 2002, the PMA blocked the union for 11 days, which cost the American economy billions of dollars, to obtain concessions on the use of scanners instead of clipboards and chalk in terminals at containers, among other changes.

In return, dockworkers received the best wages and benefits among blue-collar workers, earning up to $195,000 a year on average, according to the PMA.

Automation is needed especially in Southern California ports because they are located in urban areas and there is no room for facilities to expand, McKenna said last week. The only solution to accommodate the growing number of containers is to make better use of the available space by packing the containers more densely, according to McKenna.

“The ‘dense pack’ you get with an automated install is really amazing,” McKenna said last week. “You can push these things 50% to 75% more cargo in there.”

Four of the 13 marine terminals in LA and Long Beach have implemented or plan to implement automation, in whole or in part. Other major ports in Asia and Europe are already fully automated.

At automated terminals, remote-controlled software-assisted cranes unload vessels around the clock and autonomous vehicles move containers around the terminal, where automated mobile cranes stack them and organize the container yard overnight for loading onto trucks and trains the next morning, according to the study published by the PMA.

It takes an investment of billions or dollars and many years to get to that point, however, and although the ILWU gave in to automation in 2008, the union scuffed the implementation. Last year, when Total Terminals International announced plans to automate Pier T in the Port of Long Beach, ILWU’s Ponce De Leon said in a statement that “ports exist for the benefit of American economies and not for the destruction of jobs and the maximum extraction of foreign profits.

Contract talks will likely go past the June 30 deadline because that’s what tends to happen every time, McKenna said. He said he hoped the positive experience of the past year, when the PMA and ILWU worked closely together to resolve bottlenecks in the ports, would continue in the talks and that he there will be no disturbances in the ports.

This will be music to the ears of retailers and other importers who have few alternatives to West Coast ports to get their goods from Asia to the US market. Although some retailers are diverting their cargo to East Coast ports, the results have been mixed as ports like Savannah and Charleston also have problems handling the large volume of imports, according to Nate Herman, senior vice president of the policy of the American Apparel and Footwear Association. .

Labor negotiations on the West Coast are a “significant concern” for the apparel industry, Herman said in an interview.

“The longshoremen deserve a lot of credit because they saved our industry,” Herman said. “They deserve a raise.”

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