With the current International Longshore and Warehouse Union (ILWU) contract due to expire on June 30th, the ILWU and Pacific Maritime Association (PMA) were set to begin negotiations this week on a contract covering West Coast dockworkers.

The main topics expected to be covered during contract negotiations are stronger safety provisions, wages, benefits, technology, and a greater respect for ILWU jurisdiction. In addition to that, PMA President, Jim McKenna, has also emphasized the need to come to agreement on the so-called “Cadillac” tax, which is related to changes brought about by the Affordable Healthcare bill passed last year.  Some are expecting issues related to the latter to result in just a 3-year contract being signed as opposed to the 6 year contract agreed to during the last round of negotiations.  Underscoring these talks is the concern by US importers and exporters, as well as other industry parties, on the effect of a coast-wide strike or lockout.  Many involved in the talks still remember the disastrous results after the terminals locked out the union in 2002 which led to extreme delays and congestion.

As reported in the Journal of Commerce, McKenna has repeated the analysis he presented at Trans Pacific Maritime conference in April that he expects an agreement will be reached a week or two after the July 1 deadline without an employer lockout or work stoppage.  Statements like these are giving some sense of optimism to the industry that these talks will be less contentious than the recent ILA/USMX negotiations and should result in minimal impact to terminal operations.

Rates with all carriers may be subject to port congestion surcharges should work stoppages occur at USWC ports.  If necessary conditions arise, this fee may apply to all cargo destined to or shipping from any US port/rail via any US, Canadian, or Mexican port.  Effective dates may vary by carrier. This surcharge is filed in most carriers’ FMC tariffs to be used just in case port congestion occurs.

Shapiro is closely monitoring these negotiations and will keep you posted on further updates.  With our worldwide network of carriers, partners, and warehouses, we are committed to providing continuous service to all of its customers.  Please contact your Shapiro representative if you have further questions or concerns about what a strike would mean for your company and how you can best prepare with a proactive plan.