Disruptions on the docks could imperil ag exports.
Though the six-year collective bargaining agreement covering nearly 20,000 West Coast dock laborers ended last month, contract negotiations appear to be progressing smoothly. A work slowdown or stoppage could imperil agricultural exports just as farmers are poised to potentially produce record crops.
This isn’t the first time that negotiations have continued after the expiration of a contract between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association that covers 29 western ports of the United States. In most cases, negotiations are finalized with little disruption. But a West Coast port disruption in 2002 locked out dockworkers for 10 days, costing the economy several billion dollars.
Representatives from both sides, who have kept a self-imposed media blackout, issued a joint statement after the contract expired saying that "while there will be no contract extension, cargo will keep moving, and normal operations will continue at the ports until an agreement can be reached."
West Coast docks are vital to U.S. produce exports, considering how much produce is produced in the Central Valley of California. They have been a growing source of U.S. soybean exports as well. Though two ports in Louisiana lead in soybean exports, the three next largest are in the state of Washington, according to U.S. Census data. West Coast docks aren’t a major factor in corn exports.
Several obstacles remain to inking a deal, based on presentations at last month’s Agriculture Transportation Coalition meeting in San Francisco. The first is how much technology to permit on the docks, which even dock operators admit are inefficient. The import market share of West Coast ports has dropped 8% since 2002, said Chris Lytle, executive director of the port of Oakland.
"Productivity and efficiency is as important for workers as it is for employers," said Lytle, who urged the parties negotiate a new plan. "We can’t let it go until the end of July or early August," he said, adding that he thinks a new pact will be inked shortly.
But other potentially serious sticking points remain. One may be who pays for an added tax hit in 2016 under the Obamacare law. The health plan enjoyed by the dock workers qualifies as a so-called Cadillac plan that would be subject to additional taxation.
Don Crosatto, who works for a rival union, the International Association of Machinists, noted that the leaders of both organizations involved in the negotiations are in their mid-sixties. He opined that they may "punt on that one and leave it to the next leaders."
Crosatto said that according to his sources, much of the discussion during the last month has been over chiropractic benefits. "Their members are conditioned to absolutely free health care," he said.
Another issue the sides are unlikely to deal with, in Crosatto’s opinion, is an unfunded pension plan liability. Even though plan assets are growing, payouts are growing faster. "I’d be astonished if they even dealt with that problem; it will be kicked down the road."
Crosatto’s remarks drew a stinging rebuke from William Adams, secretary-treasurer of the International Longshore and Warehouse Union, who attended the conference. Adams called Crosatto a "scab" and a "coward" and said that he shouldn’t be talking publicly about the negotiations. The two unions are involved in a long-standing lawsuit.
Adams also said the ILWU is committed to improving productivity on the docks.
Meanwhile, several shippers and carriers at the conference said they are making contingency plans in the event of a work slowdown or stoppage. Most of those involve shipping through Canada or Mexico, which during the last 10 years have taken share from U.S. West Coast ports.
The Wall Street Journal reported that total imports arriving on containers fell to 60.6 metric tons last year, compared to 65.5 million in 2004. The lack of activity has apparently contributed to harmony between dock workers and operators.