Why the West Coast is Staying Open

Mayor Garcetti of Los Angeles has reached tentative agreement with Teamster to avoid possible port disruption. PMA will send on-site staff to all Southern California terminals to watch and measure any abnormal events.

The ILWU master contract was officially extended until this Friday morning 8a.m. PST. Both parties have agreed to take a 72-hour break from negotiations on a new coast-wide contract while the ILWU attends to an unrelated negotiation in the Pacific Northwest.
In 2002, the International Longshore and Warehouse Union’s contracts were gapped for nearly a month, resulting in a 10-day shutdown of 29 ports along the West Coast. Ports only reopened after former President Bush invoked the Taft-Hartley Act to save the $1 billion in fees the U.S. citizens were paying for each day the ports were closed.
Why are the ports staying open in 2014? Why haven’t the ILWU and Pacific Maritime Association reached an agreement? Keep reading to learn more about the West Coast shutout.

Money Talks

Today, a strike would cost the U.S. more than $2 billion each day, over twice as much as in 2002. Uneducated citizens ogle over the protection and opportunities of a union job that pays $25 to $40 an hour. So, the heightened press that comes with a strike could undercut the ILWU’s bargaining position because of the high demand for those jobs.

Peer Pressure

Mexico, Canada and Gulf ports have expanded their staffing and hours to accommodate the congestion foreseen with the ILWU contract negotiations. This puts pressure on the West Coast ports to stay open because after changing routes, fewer retailers are likely to return their supply chains to an unreliable port.

Expanded Opportunities

The 29 ports in question are responsible for moving 12.5 percent of the U.S.’s gross domestic product each year, a 50 percent increase from 2002. They also handle over 70 percent of imports from Asia. A prolonged dispute between the ILWU and PMA could result in ripple effects in the U.S. economy that are too big to ignore.
To stay ahead of the game, the National Retail Federation still suggests keeping your contention plans at the ready in the case of a disruption. There is too much uncertainty surrounding the matter to feel at ease just yet, and a good contention plan should keep your supply chain moving smoothly.
Please let us know if we can help.  Contact our international team by email international@elangham.com or get help by calling 855-214-2844.

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