West Coast Ag shippers warn of prolonged dockside labor discussions

While negotiations for a new labor contract covering nearly 20,000 dockworkers at 29 West Coast ports are continuing, shippers are urging The Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) to come to terms for a new six-year contract quickly.

According to Peter Friedmann, Executive Director, Agriculture Transportation Coalition (AgTC), there are several compelling reasons why U.S. West Coast ports are facing “critical” challenges. 

“Powerful global and national trends that are out of your (and our) control are beginning to determine how much import and export cargo will flow through West Coast ports,” says Friedmann in an open letter to Robert McEllrath, President, ILWU and James McKenna, President & CEO, PMA. “These trends are of concern to us and should be of concern to you…we are in the same boat.”

The talks, which began on May 12, remain on the table until an agreement on coast-wide contract expires on June 30, 2014. Media reports that the talks had been “suspended” were inaccurate, says PMA spokesman, Wade Gates.

Meanwhile, Friedmann says his constituents share a number of concerns:

*Production of consumer goods, including consumer electronics, toys, processed foods, footwear, apparel, household goods, furniture, etc. will continue to migrate from North Asia (Korea, Japan, China) towards South Asia (Vietnam, Singapore, Bangladesh, India). As manufacturing moves south, it also is moving closer to the Suez Canal; what moves through the Suez Canal goes directly to the U.S. East Coast ports.

*The eastern third of the country contains two thirds of American consumers. Since the last Census, six of the seven fastest growing states were in the East/South. That is why importers of consumer goods are increasingly bringing those cargoes through the most direct route, via the Suez Canal to the ports closest to those consumers.
*Major U.S. importers, recognizing the population density on the East Coast and some of the trends above, are locating their largest distribution centers strategically, close to the East Coast populations and ports. Whether Memphis or Spartanburg or Houston, these distribution centers are closer to East and Gulf Coast ports, than to the West Coast ports, and could increasingly take market share from the West Coast.

*As manufacturing returns to the U.S., such as auto plants, it appears to be going to the “Right to Work” states, which are close to Southeastern ports. Imported components could enter through nearby Southeast ports, and finished products would then exit those ports.

*If an increasing share of our imports start entering predominantly through Gulf and East Coast ports, that is where the “empties” will be. The railroads will have to bring the containers from those locations, to the places where our agriculture is produced, or bring that agriculture by rail and transship into containers at those East and Gulf Coast ports. This will be more costly, but it will not be impossible for the flow of some (but certainly not all) ag and forest products to change directions. Instead of heading west from our Midwest, it could head east or south before being loaded on a ship. That is already happening, contends AgTC.

Tomorrow: Port productivity