Dockworkers’ labour contract expires at vital link in US supply chain

Jimmy Monti, a longshoreman at the sprawling Los Angeles-Long Beach port complex, has seen economic booms and downturns in his 24 years on the job. But the third-generation dockworker had never experienced anything like the past two years.

The start of the pandemic in 2020 brought activity at the port almost to a standstill. But by the summer of 2020, “shipping opened back up, and it was crazy, like a water faucet that had been dripping all of a sudden was turned on full blast”.

That surge brought record amounts of cargo — 10.7mn containers passed through the Port of Los Angeles last year — as Americans shopped their way through the pandemic.

It also led to unprecedented congestion, with more than 100 container ships anchored at sea in January as they waited for a berth to be unloaded. The back-up at the ports, which handle about 40 per cent of US imports, became a symbol of the supply chain problems that have contributed to higher inflation.

Now Monti and 22,000 other port workers on the US west coast are in contract negotiations with the Pacific Maritime Association, a group representing the global shipping lines and terminal operators, such as Maersk, Cosco Shipping Lines and Evergreen Marine. The longshoremen are looking for a 10 per cent pay rise and protection from automation in exchange for extending the hours that the docks are open, according to academics who follow the industry. Workers say they deserve more money given their performance in the past couple of years.

“There was a lot of pressure to come to work day and night, to work faster and harder to deal with the overcrowding and congestion in the terminals,” said Monti.

Monti and his colleagues, members of the International Longshore and Warehouse Union, say the shipping lines can afford to be generous. With freight rates reaching record highs, companies including Maersk raked in total profits of more than $190bn in 2021 — more than 15 times their 2019 levels. Meanwhile, wages for full-time longshoremen are good, ranging from more than $100,000 to more than $130,000 a year, according to a recent study by the Economic Roundtable. Clerks, the highest paid group, earn more.

The contract expired on Friday, but the two sides agreed to keep talking. “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,” the PMA and ILWU said in a joint statement, adding they were “mindful of the need to finalise a new coast-wide contract as soon as possible”.

Contract disputes between the ILWU and the PMA have disrupted the flow of goods in the past. In 2002 the George W Bush administration had to intervene after dockworkers were locked out by the PMA, costing the US economy an estimated $1bn a day. In 2015, when the current agreement was signed, the Obama administration intervened to end a contract fight that had lasted a year.

While both sides say they want to avoid anything that would exacerbate the supply chain problems, Jake Wilson, professor of sociology at California State University Long Beach, notes that labour has been more assertive since the pandemic began. There have been high-profile unionisation efforts at Starbucks, Apple and Amazon recently.

“In the last year and a half we have seen a strike wave around the country,” Wilson said. “I really think this is a key moment for [dockworkers] to stick to their guns and make sure they protect these jobs.”

Any slowdown at the ports would be a blow to the Biden administration as it struggles to contain the highest inflation rate in 40 years. Biden has been working to ease supply chain bottlenecks, including by securing commitments to expand the ports’ hours.

Last month, the US president touted improvements at the ports during a visit to Los Angeles, noting that there were 40 per cent fewer shipping containers stacked on the docks than last autumn. He also attacked shipping lines for raising freight rates during the pandemic.

Automation of high-paid jobs such as crane operator is likely to be the focus of the remaining negotiations. Many of the Asian ports that ship to the US are highly automated and operate nonstop, in contrast to the LA and Long Beach ports, which operate six days a week.

The ILWU argues that automation has already cost hundreds of jobs at the ports, but shipping lines claim it adds jobs by allowing the ports to handle more cargo.

Christopher Tang, a professor at the UCLA Anderson School of Management, says the ILWU is seeking to block further automation at the Los Angeles ports, which already have two automated terminals.

“If you look at the ports in Rotterdam, Shanghai and in the Middle East and Singapore, most cranes are automated,” he said. “Here we still use humans to do that, which is extremely inefficient and archaic. This is truly unnecessary. It’s only for job protection.”