West Coast Port Dispute Is Over, but the Damage from It Isn’t
Business + Economy

West Coast Port Dispute Is Over, but the Damage from It Isn’t

The dockworker contract battle that virtually shut down ports on the West Coast came to an official end Friday when the members of the International Longshore and Warehouse Union (ILWU) voted to approve a five-year contract negotiated with the Pacific Maritime Association (PMA), which represents the affected U.S. port operators and shipping lines. While there is evidence that the work stoppage significantly damaged the country’s economic performance in the first quarter, there are additional questions about how much harm it may have done to the long-term health of West Coast ports in general.

The ILWU, which represents a large share of workers at 29 ports up and down the West Coast, including some in Canada, was in contentious negotiations with the PMA early this year. The PMA accused members of the union of orchestrating work slowdowns to increase the pressure on the port and shipping line operators.

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By February, agricultural goods intended for export were rotting on the docks as ships waited endlessly offshore. U.S. Labor Secretary Tom Perez finally helped broker a deal that got things moving again, but not before significant damage was done to the economy. When the first-quarter GDP numbers were released last month, they showed a 0.2 percent growth rate — one fifth of what economists had been expecting — and one of the key culprits was the work slowdown on the West Coast.

All manner of U.S. goods flow through those ports, noted Diana Furtchtgott-Roth, a senior fellow at the Manhattan Institute, and many exporters were hurt. Apple farmers alone, she wrote, lost $19 million per week.

“Slowdowns prevent shippers and truckers from operating, which raises costs for U.S. importers and exporters. Higher costs are passed on to U.S. consumers and make American exporters less competitive,” Furtchtgott-Roth wrote. “Further, when foreign clients replace U.S. exporters with cheaper, more reliable alternatives, it can be difficult, if not impossible, to later restore such relationships.”

But in the long run the most lasting damage the strike did may be to the West Coast ports themselves.

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The labor agreement struck between PMA was for a five-year contract, but for the shipping industry, where the round-trip journey of a large container ship from its home port to multiple destination ports and back again is measured in months, the prospect of another potential labor dispute as soon as 2020 is a concern right now.

Canadian and Mexican ports are in strong competition with West Coast U.S. ports as it is, and there is another major issue on the horizon: the expansion of the Panama Canal. The ambitious project begun in 2007 is nearing completion and will not only double the number of ships that can pass through the key link between the Atlantic and Pacific Oceans, but will vastly increase the size of the ships that can be accommodated.

East Coast and Gulf Coast ports are expecting that many ships that would otherwise offload cargo on the West Coast to have it transported eastward over land will in the future use the canal to bring their goods closer to the markets they serve.

In a statement Friday, PMA President and CEO Jim McKenna pointed out that negotiating a new contract was only the first step for the West Coast ports in their effort to prepare for a difficult future.

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“This contract provides an important framework for the hard work ahead to overcome new competitive challenges and to continue to position the West Coast ports as destinations of choice for shippers worldwide,” he said.

“[T]hose ports have long been the primary gateways for cargo coming into and leaving the United States, and our interests are aligned in ensuring they can effectively, and efficiently, handle the capacity growth that drives economies and jobs.’’

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