Tensions between the International Longshore and Warehouse Union (ILWU) and port operators through the Pacific Maritime Association may be approaching their most dangerous levels since a costly 2002 work shutdown as more than two dozen ports were temporarily shuttered over the weekend. More of this could scuttle the domestic economy enough to cause a first quarter contraction, according to NACM Economist Chris Kuehl, PhD.
Pacific Martime reportedly shut down many ports along the U.S. West Coast over the weekend, alleging workers have been intentionally cutting their production in protest over the ongoing contract and working conditions disagreements. This includes the Los Angeles and Long Beach ports that account for approximately one-third of trade activity, according to some estimates. The ports did reopen Monday.
Recent federal mediation in ongoing disputes among port players on the U.S. West Coast appear to be backfiring, driving the parties further apart. Kuehl said a prolonged work stoppage could throw the U.S. economy into a recession for the first quarter. In 2002, a 10-day work stoppage cost West Coast ports upward of $1 billion per day, and that was before nearly as many U.S. businesses felt compelled to sell products outside of the country. The financial impact could be double in 2015 because businesses have sought more buyers, in B2B and retail, outside of the U.S. due to changes inspired by the Great Recession domestically and increased trade support programs promoted by the Obama Administration with the stated goal of doubling American exporting activity.
Problems in the shipping industry are numerous and include the presence of larger-sized ships, more ships arriving in ports daily, out-of-date technology compared with overseas ports, shortages of key equipment and greater demands on port workers without increases in staffing.
- Brian Shappell, CBA, CICP, NACM managing editor