On July 1, 2022, the contract expired between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA). Although both sides were hopeful that contract renewal negotiations would be swift, the expiration instead kicked off a long renegotiating process, shipping congestion, and uncertainty for shipping ports nationwide.
With a tentative agreement now in place, both sides are hopeful that the ongoing ratification process will stabilize shipping operations for these ports. As the West Coast shipping saga draws to a close, let’s look back at this major supply chain event to see how we got here.
The beginning of the California dock workers’ strike
The ILWU represents dockworkers working at 29 ports across the U.S. West Coast, with approximately 29,000 members. These ports account for nearly half of container traffic in the U.S. Meanwhile, the PMA is comprised of about 70 terminal operators. These organizations are well-acquainted with fraught negotiations: three out of the last four re-negotiations led to delays and employer lockouts.
After the contract between the ILWU and PMA expired in 2022, it became clear that there were several difficult points that would take some time to settle. The ongoing disagreement could either lead to a work to rule/unofficial strike scenario or a full, formal strike. The former would leave workers only working to the hours agreed upon in the 2014 contract, causing staff shortages and delays. The more disruptive option, a full strike, would lead to serious impacts to other ports and other forms of transportation, such as rail or road.
With issues including increased automation, wage increases, pensions, and more on the table, negotiations proved to be trickier than expected, despite hopes that the two parties would come to an agreement within a few months.
May 2023: A year into the California dock workers’ strike
Despite initial optimism that the ILWU and PMA would be able to reach a quick agreement, 10 months of negotiation talks only heralded more uncertainty. Both groups continued to bargain over several key sticking points.
While the organizations had agreed on most major issues, wages and pensions were at the heart of the final stages of negotiations, with dockworkers aiming for a pay raise of 10% in the first year of a two-year contract. The PMA, however, is pushing for a six-year contract to avoid further short-term disruptions.
Negotiations continued throughout May, with industry experts hopeful that a multi-year contract would be announced in June, when the process of ILWU voting could begin. With these final set pieces in discussion, supply chain managers were hesitant to commit to increased shipping flows to West Coast ports before a signed agreement was in place.
While there was very little reported congestion on the West Coast ports, as wait times and vessel counts stayed below the three-month average, cargo flows continued to be diverted to the East and Gulf Coasts.
June 2023: An initial agreement for California dock workers
On June 14, the ILWU and PMA announced a tentative six-year agreement, significantly decreasing the chances of major disruptive West Coast port strikes.
This agreement was fraught, as the ILWU requested a 70% wage increase, while the PMA was only willing to offer 40% at the beginning of June. During this period, West Coast ports experienced a 13% increase in dwell times. And, during the first week of June, over 85,000 containers loaded with goods worth over $5.2 billion were held at the ports of Oakland, Los Angeles, and Long Beach. With a simultaneous stoppage in rail transport from the ports of Los Angeles and Long Beach to Denver, businesses suffered greatly, with some even facing profit losses of up to 80%.
Meanwhile, ILWU Canada announced authorized strike action beginning June 24, affecting the Port of Vancouver and the Port of Prince Rupert. Coupled with drought conditions in the Panama Canal, port delays and disruptions are far from over, as West Coast ports experienced the highest combined wait times of any coast.
July 2023: California dockworkers ratify the proposed agreement
As the ILWU and PMA’s contract agreement goes through the ratification process, supply chain managers, shippers, and businesses are hopeful that a successful finalization will ensure smooth operations to the West Coast until 2028. Businesses may now look at moving their shipments back to California’s West Coast ports as the year progresses, depending on how the ratification goes. There is no set timeline to ratification, and so the contract may not be finalized for months.
The Panama Canal is continuing to experience drought conditions, with record lows in water levels making normal shipping flows impossible. A developing El Niño weather pattern, which could cause a decrease in rainfall, may also negatively affect shipping patterns through the canal, with some shippers routing barges through the Suez Canal instead.
Despite these ongoing situations, average wait times for the U.S. West Coast ports have fallen, with below average wait times and vessel counts.
Canada’s dockworkers go on strike
Even if the California dock worker agreement is finalized, a looming Canadian dockworker strike may complicate west coast shipping. The Canadian dockworker strike began on July 1, halting port operations at more than 30 western Canadian ports, including the Ports of Vancouver and Prince Rupert. This will have a great impact on the economy, as 25% of Canada’s imports and exports move through these two major ports.
As the situation continues to unfold, the strikers may be ordered back to work by the Canadian government. Either way, until the situation is resolved, U.S. West Coast ports may experience increased congestion and wait times as shippers scramble to find ports able to take their cargo.
Looking forward
Despite a potential end in sight to the ILWU and PMA negotiations, the future may still be uncertain for West Coast ports. Even if the agreement is fully ratified, the Canadian strikes may have an impact on wait times, as vessels are redirected to the U.S. Furthermore, the issues that were the most difficult to negotiate for California’s dock workers are likely to reappear in future contract negotiations.
Insight into port activity is crucial for logistic operators and businesses alike. Strikes, unexpected weather patterns, and other uncontrollable events can all lead to changes in shipping patterns, straining working ports and causing delays. The ILWU and the PMA saga may be close to over for now – but it doesn’t mean be smooth sailing forever.
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