More Disruptions to the Supply Chain on July 1, 2022?

The International Longshoreman Warehouse Union’s (ILWU) current contract will expire on July 1, 2022. The biggest question remains, will the Pacific Maritime Association (PMA), which represents the vessel carriers, be successful in securing either a new contract or an extension of its collective bargaining agreement for the West Coast Ports?

Three months ago, Marty Walsh, U.S. Labor Secretary, was in Los Angeles to meet with the ILWU and PMA and indicated he is available if the two sides reach an impasse in bargaining. While the current agreement is already a three-year extension, little guarantee exists that it will be extended or renegotiated in short order.

What is known?

• Inflation is up as of this week by 7.5% and is anticipated to rise as the Russian invasion of Ukraine continues. 
• With the cost of living continuing to rise, unionized businesses can expect pressure to provide increased salaries or employee incentives. 
• Vessel carriers recorded billions in earnings and have substantial amounts of cash to invest in artificial intelligence (AI) or commonly referred to as on-dock automation. The ILWU, should it accept AI improvements, will want to be fully compensated for the loss of union jobs.

No one knows what will happen until the international trade industry reaches the throws of July 1, 2022.

The National Retail Federation (NRF)
The NRF is closely monitoring the situation, especially as the July 1 deadline is quickly approaching, which is fewer than 90 days away. The association has called on the PMA and ILWU to begin contract negotiations in advance of the expiration date of the contract. However, as of last week, the ILWU remained uninterested in beginning negotiations and may allow the contract to expire.

During the COVID breakout that created the ongoing West Coast Port congestion, both the ILWU and the PMA have worked in collaboration to cope with the unprecedented cargo wave over the past two years. No one knows if the same collaboration will continue.

What does the negotiation mean to shippers and importers?
At this point, no one really knows if the ILWU will commit to uninterrupted work once the contract expires or if negotiations will extend beyond the contract expiration.

Western Overseas Corporation is available to assist clients with merchandise arriving at all US ports. Please contact your Western Overseas representative with any questions.