Workers and employers announced a tentative agreement on a new six-year contract that will cover employees at all 29 West Coast ports, a major step toward averting fresh supply chain troubles for the U.S. economy.
The talks dragged on for more than a year to replace the previous pact that expired July 1. Both parties must now ratify the agreement.
The deal was announced in a joint statement by the Pacific Maritime Association — which represents employers — and the International Longshore and Warehouse Union on June 14 and comes as the world’s largest economy struggles with inflation and rising interest rates, problems that would be exacerbated by port shutdowns.
While import volumes are down across the U.S., West Coast ports have been losing market share as shippers diverted their goods to East and Gulf Coast maritime hubs, in part to avoid potential disruptions.
Read more: West Coast Dock Works Reach Tentative Agreement with Shippers
President Joe Biden on June 15 hailed the tentative agreement as proof that “collective bargaining works” and said it delivered for port workers who will get “the pay, the benefits, and the quality of life they deserve” after “heroically” working through the COVID-19 pandemic. He also called it “good for the economy and keeping our supply chain open.”
“We are pleased to have reached an agreement that recognizes the heroic efforts and personal sacrifices of the ILWU workforce in keeping our ports operating,” PMA president James McKenna and ILWU president Willie Adams said in the statement. “We are also pleased to turn our full attention back to the operation of the West Coast ports.”
The parties did not release details of the agreement, which was reached with assistance from Acting U.S. Secretary of Labor Julie Su.
“The tentative agreement delivers important stability for workers, for employers and for our country’s supply chain,” she said in a statement.
Biden praised Su for using her “deep experience and judgment” to help the sides “reach an agreement after a long and sometimes acrimonious negotiation.” Su faces a tough confirmation battle in the U.S. Senate to lead the Labor Department on a permanent basis.
The timing of the deal was surprising, given that several observers had cautioned that the tone had recently soured, and finger-pointing was intensifying at this stage in the impasse.
S&P Global Market Intelligence said on June 13 that the two sides were still “far apart,” with dockworkers wanting 70% wage increases and the employers offering about 30%.
Both sides are feeling financial pressure. Shipping companies, which brought in record profits through the pandemic, are struggling in 2023 amid a plunge in container rates and softer demand. Meanwhile, workers argue they’re feeling the sting of inflation, which is still about double the Federal Reserve’s target even though it’s eased in recent months.
Read more: Flurry of FMC Complaints Reveals Widespread Accusations of Ocean Carrier Profiteering
The White House had recently faced heightened calls from industry to intervene as labor-related disruptions spread up and down West Coast ports. The administration preferred a resolution without its direct involvement but was also keen not to have new supply chain disruptions arise as Biden begins his reelection campaign.
The U.S. Chamber of Commerce estimated that a work stoppage at ports from Seattle to Los Angeles could have cost the economy $1 billion a day.
U.S. retailers and importers who diverted goods to East and Gulf Coast ports during the year-long contract negotiations have said they won’t bring cargo back to the West Coast ports until a deal is ratified, which could take several weeks.
Nonetheless, the National Retail Federation (NRF) and Retail Industry Leaders Association were relieved and encouraged by the tentative deal, with both organizations urging quick ratification of the agreement.
“It is essential to begin the negotiation process early for the next labor contract and avoid a future lapse in continuity,” the NRF said.
