How the logistics sector is changing, and why the UPS strike was unlikely
Spend Matters has published an interesting Q&A with a supply chain academic on the union ...
The 14 strike-hit container terminals in the US west coast ports of Los Angeles and Long Beach will resume working operations later today after an agreement over contract negotiations was reached as executives from the Federal Mediation and Conciliation Services (FMCS) arrived at the port last night.
The strike by clerical workers protesting against alleged plans to outsource their jobs to Texas and Taiwan, among other places, drew support from dockers in the International Longshoremen and Warehouse Union and shut down large parts of the LA-Long Beach complex – the country’s largest container gateway – for eight days, but a tentative agreement was reached between the Harbour Employers Association, representing the terminals, and the ILWU Office 634 Office Clerical Unit
Local media outfits reported FMCS director George Cohen as saying: “The parties reached their own agreement. There is no question in my mind that collective bargaining is the best example of industrial democracy in action.”
However, the clearing the box backlog could take well into the New Year, The Loadstar has learned.
Sean Strawbridge, managing director of Trade Relations and Port Operations of the Port of Long Beach estimated that for every day on strike the port was facing three-to-four days to get things back on track. With eight days of delays, operations were unlikely to get back to normal until the New Year, he said, with ships diverted to Mexico and Canada in a bid to avoid the costly impact of the strike
The ILWU downed tools in more than 80% of terminals in the West Coast port complex, bar only four terminals – TraPac, SSA Pier C, SSA Pier A, and PCT Pier J.
Mr Strawbridge told The Loadstar ahead of his presentation at TOC Americas in Panama that the economic impact of the strike was higher than the US$1bn figure being quoted in mainstream media, and said it could amount to as much as $20bn.
“This has a big impact on southern California. The economic impact is more like $2.5bn a day. That is the wholesale value of the goods at $1bn, plus the retail value of $1bn when you factor in a 100% mark-up and there is a further $500m in lost revenues for the supply chain, the ports, the railroads, logistics operators and also all the lost tax revenues on labour and sales tax revenues. It’s a big impact,” he said.
Mr Strawbridge also said he was frustrated the issue did not seem to receive the importance it deserved in political circles, despite the fact that it threatened to move into its second week.
“The war in Iraq and Afghanistan costs the US government $1bn a day. This has an even bigger impact on the US economy and yet where is the national debate? We are now in our eighth day,” he said, although he added that the positive news was that strike action had come “at a good time” for the supply chain, with goods already in the shops for Christmas.
Timid carrier executives on the sidelines of this year’s TOC Americas were reluctant to incur the wrath of the ILWU but expressed a desire to take a stand on the issue of the possible outsourcing of clerical jobs in a bid to break the union’s stronghold on West Coast gateways.
“This time we are more united,” said one West Coast-based carrier executive. “We want to take on the unions we also want to show that the industry cannot continue to pay its labour nearly $200,000 a year. It is just not sustainable.”
There were some terminals that had not been affected by the strike, said OOCL’s US senior vice-president of operations Tzi Fan Hau. “The vessel sharing agreements between lines, however, have made it more complicated for lines with terminals that remain open,” he said.
The strike had seen Los Angeles mayor Antonio Villaraigosa cut short a trade mission to Latin America – where, ironically, he had been extolling the efficiency of the LA-Long Beach container terminals – and return to help mediate the dispute. He subsequently called in the FMCS, which is understood to have arrived at the port just has the two parties had arrived at an agreement.
Local reports said that a key aspect of the deal was the employers’ acceptance to hire temporary workers from the union’s ‘hiring hall’ rather than go to outside contractors.