House lawmakers canvassed last week at a port industry conference in Washington had differing opinions about the potential need for federal intervention to keep trade flowing if growing labor tension between marine terminal operators and unionized dockworkers on the Eastern seaboard and Gulf Coast is not resolved by Sept. 30.
Asked about the potential impact if negotiations involving the International Longshoremen's Association stall, Rep. Janice Hahn, said, "It's vital that our labor groups have fair, safe contracts. But I'm not sure federal involvement is the answer. Whether or not the executive branch steps in is not something I necessarily agree with. I always think contracts are better negotiated by the sides involved."
Hahn, a California Democrat who recently founded the House PORTS Caucus after winning a special election last July to represent the 36th district, recalled being in Asia on a trade mission as a Los Angeles councilwoman in 2002 during the 10-day lockout of longshoremen on the West Coast. The dispute not only hurt the national economy, but fatally injured some small businesses in South Korea, Japan and China, she said.
The lockout of the International Longshore and Warehouse Union by the terminal operators, represented by the Pacific Maritime Association, caused an estimated $10 billion in damage during the shutdown, not including follow-on costs of delays and capacity shortages associated with unwinding the backlog of containers.
President George W. Bush in 2002, invoking the Taft-Hartley Act, successfully sought a court injunction to reopen the ports because of the military's need to use commercial shipping facilities to supplement transport of war materiel.
Rep. Ted Poe, R-Texas, and co-chairman of the PORTS Caucus agreed that the situation needs to be resolved by the two parties because "any time you get the government involved in an issue like that the results aren't always the best."
But House Transportation and Infrastructure Committee Chairman John Mica, R-Fla., while talking with a handful of reporters about the surface transportation bill before Congress, said the government "shouldn't allow" a shutdown to occur. He acknowledged not being very familiar with the issue and possible remedies, but added, "We're trying to keep projects, business, infrastructure moving."
Last December, Mica introduced legislation that would have imposed contract terms recommended by a presidential board on railroads and rail workers to prevent damage to the broader economy. The bill was not necessary as the rail industry and unions eventually came to a mutual agreement.
The American Association of Port Authorities asked congressional leaders at the time to uphold their constitutional responsibility to protect interstate commerce, noting that railroads are responsible for moving a large amount of goods to and from ports to inland locations.
Negotiations on a master contract between the ILA and the U.S. Maritime Alliance, (USMX), the bargaining arm for terminal operators, carriers and stevedoring companies, are scheduled to begin later this week.
ILA President Harold Daggett three weeks ago threatened a strike if USMX doesn't meet its demands. He identified automation as the major sticking point. Other key topics of negotiation include retaining the right of longshore mechanics to repair container chassis even as many carriers seek to get out of equipment ownership, and handling overweight containers.
The current contract expires at the end of September. The ILA and port operators have enjoyed relative labor peace for more than 35 years.
The ILA master contact governs handling of containers and military cargo from Maine to Texas and on the Great Lakes, but work rules and compensation for handling breakbulk cargo are determined by local officials in each port.
ILWU President Robert McEllrath voiced rhetorical support for the ILA at a major maritime conference earlier this month, but there are no concrete indications at this time that the ILWU will act in solidarity with the ILA if there is a work stoppage of some kind. If a nationwide strike were to occur it would be “devastating,” economist John Martin, who studies the port sector, said during a question period at the American Association of Port Authorities' spring conference.
A full-scale sitdown on the West Coast is unlikely because choking off the entire nation from international ocean commerce would invite swift federal intervention, international trade and transportation attorney Ashley Craig, a partner at Venable LLP, said. But the ILWU could try to flex its muscle through smaller actions at certain ports, or a work slowdown, to demonstrate sympathy with the ILA, he said in a phone interview.
Martin, who heads his own eponymous consulting firm in Lancaster, Pa., said astute shippers will make contingency plans to keep their cargo moving through alternate ports, but won't permanently change their supply chains as happened after the 2002 shutdown because they've already diversified their ports of entry. Ten years ago the majority of apparel and consumer goods entered the country through West Coast ports.
"I don't see the structural shifts occurring because those structural shifts are already in place," he said.
Richard Larrabee, director of commerce for the Port Authority of New York and New Jersey, refused to take sides during an interview, but said the port needs to improve on productivity and controlling costs to "increase competitiveness and make the transport system more efficient" in a new era of mammoth container ships. Ports typically gain efficiency through infrastructure enhancements and faster handling of cargo on the piers.
"It is my sincere hope that there is no strike," Paul Anderson, port director of the Jacksonville Port Authority in Florida, said on the sidelines of the conference. As shippers enter the season for signing annual ocean transportation contracts, they will be closely watching how the USMX-ILA talks develop in Tampa to make sure their cargo doesn't get trapped by a work stoppage, he said. — Eric Kulisch