Terminal operators and shipping lines have to negotiate a new contract with the International Longshore and Warehouse Union which constitutes 14,000 workers along the entire West Coast. This could pose big problems as a clerical union threatened strike at these same ports. A deal was struck with the clerical workers, but many big retailers are worried about the looming talks with the longshoreman’s union. In 2002, a 10 day strike by the union caused major delays in deliveries and a rise in prices.
A trade group representative says that a possible walkout is disruptive because it causes unpredictability with retailers and complex supply chains. The west coast ports handle $500 billion in cargo each year.
One of the problems with the negotiations is the planned automation of ports in these areas. Union representatives fear job losses as a result of modernizing the ports, but retailers favor it as it leads to more efficient supply chains. The union’s workers are one of the highest paid in the U.S. with 60% of them making $127,000 a year and receiving full benefits.
West Coast port operators look to modern ports in Asia and Europe and say that they too need to modernize. East coast ports are already modernizing and will see improvements in the speed of loading and unloading at the docks.
Demand for increased capacity is foreseen at the West Coast ports and updating to more automated processes will enable the ports to handle the increase. Automated systems will eliminate the need for many workers with only a few involved at the beginning and end of loading and unloading.
Canadian and Mexican ports can benefit from strained work relations with suppliers having to find alternative routes for shipments to the U.S.
Source: Machalaba, Daniel. 2007. “Retailers Warily Await Port Talks.” Wall Street Journal, 03 August.