ILWU and PMA come to an agreement on a new west coast contract but questions for the future remain

It looks like the finger pointing and verbal attacks may have subsided for the time being as word came over the weekend that the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) reached a tentative labour deal. Nine months of off again/on again negotiations and cargo disruptions across 29 US west coast ports costing billions in lost revenue for businesses looks to finally be over.

The deal is subject to ratification by the union, shipping lines and terminal operators and no details of the terms were revealed. However, according to several publications some of the biggest issues, including health care coverage and pensions, had been resolved, but the talks were stuck over how to arbitrate future workplace disputes.

So now the clearing of backlogs of cargo begins. Port officials noted that it could take six to eight weeks to clear the immediate backlog piled on docks and maybe several months for freight traffic to return to some sense of normalcy. According to one publication, Gene Seroka, Executive Director of the Port of Los Angeles, wants to prioritize ships serving US military bases on the Pacific Rim or carrying perishables such as produce, autos or goods for major retailers.

After working for almost eight months without a contract, union members now have one to vote on but the situation that occurred along the US west coast certainly highlighted other issues that need to be addressed. Among these issues are how best to handle the increasing container trade, bigger vessels and the logistics of growing shipping alliances? In addition, publications highlight the increasing shortage of truck drivers and truck trailers.

As was the case in 2002, it is likely some cargo volume will shift to other ports such as the East and Gulf ports. But, if this is to be the case, businesses need to rethink their overall supply chain as noted in last week’s brief: “The rising costs of the west coast port situation. Times are changing and a strong supply chain is one that is constantly reviewed to reflect these changes in economics, industries and other markets. These changes often take the form of a change in modal mix, a change in sourcing locations, a change in warehouse locations or even an upgrade in IT. For such constant evolution to be successful, and to avoid another crisis, all involved in the supply chain need to work proactively together in the future.