Bill Virgin: West Coast ports have a lot riding on stable labor relations

In tennis, it’s known as the unforced error, the phenomenon of hitting what appears to be an easily returnable ball into the net or over the fence.

In politics, those unforced errors commonly show up as gaffes. Cliches (“You are your own worst enemy”) and military strategy (Napoleon: “Never interrupt your enemy when he is making a mistake”) have been inspired by the practice.

The West Coast maritime shipping industry — ports, terminal operators, shipping lines and labor — committed a huge unforced error in late 2014 and early 2015. Now the industry and its players appear ready to prevent a recurrence.

Delegates to a meeting of the International Longshore and Warehouse Union, representing ports from Bellingham to San Diego, have approved a proposal to ask members about extending the current five-year agreement with the Pacific Maritime Association for another three years, from 2019 to 2022. The ILWU didn’t publicly release a timetable for the vote, but reports suggest ballots are already in the mail.

Here is why this is a big deal: In 2014, in the midst of prolonged contract negotiations between the ILWU and PMA (which represents carriers and the stevedoring companies working at the ports), West Coast container ports began slowing down and seizing up. Boxes weren’t moving on or off the docks. Millions of dollars’ worth of cargo, including Washington agricultural commodities, was delayed or never shipped.

The PMA blamed the union for deliberately instigating a slowdown as bargaining leverage. The ILWU denied blame, pinning port congestion on such factors as bigger ships, a seasonal surge of cargo and a shortage of truck drivers and chassis.

Contentious contract negotiations and sour labor relations are not unheard of on the West Coast, but this dispute was particularly inauspicious not just because of its length and size but because of its timing. With cargo not moving through the West Coast, shippers scrambled to make temporary alternative arrangements, such as going through Canadian ports or directly to the East Coast. With the prospect of a widened Panama Canal beckoning, those shippers mulled over the possibility of making those temporary arrangements permanent.

The ILWU and PMA eventually settled on a new five-year contract, but by then a lot of damage had been done, to both the economy and reputations. The West Coast ports took a big hit in what they could offer to customers in reliability.

With that painful experience in mind, both sides began kicking around the idea of extending the current contract rather than going through another bruising negotiation that would further erode the West Coast ports’ attractiveness and make alternatives more plausible.

A contract extension isn’t a radical idea, particularly in the Puget Sound region where both major Boeing unions have agreed to extensions to secure work and jobs here. But it’s no cure for labor-relations problems. The Boeing unions are unhappy over layoffs and work moved elsewhere, which might make them disinclined to consider more extensions.

Even if it’s ratified, the PMA-ILWU agreement is only for three years. The ILWU announcement about the vote pointedly includes the phrase “this non-precedent-setting proposed extension.” In other words: This is a one-time deal. Don’t make any assumptions about 2022.

Still, the agreement does temporarily set aside a distraction from all the other competitive, economic and operational challenges West Coast ports have no choice about dealing with. Those include all those other ports, U.S. rail and highway capacity, financial instability among shipping lines, consolidation of routes, capacity and port calls, and the state of the global economy.

The extension puts off one opportunity for an unforced error, i.e. another port slowdown, but it doesn’t eliminate others. For example, the South Coast Air Quality Management District in California is considering per-container taxes to fund zero-emission trucks operating at ports and warehouses. That would be a self-inflicted competitive disadvantage, to the benefit of other ports, such as Tacoma and Seattle.

A seaport alliance spokeswoman says regional ports prefer to address air-quality issues through programs, such as using grants for retrofitting or scrapping older vehicles and equipment.

“We’re cautious in introducing fees that might make us less competitive for the discretionary cargo that can go through other gateways,” she said.

It also is possible that the rank-and-file says no thanks to the idea of a contract extension. That doesn’t mean 2019 will be 2014 all over again. The two sides could sweeten the extension offer, or try bargaining a new agreement ahead of time, or pledge to keep the ports operating and cargo moving no matter how long negotiations last.

That would disappoint competitors. Oh well. Better for the region to win the competitive battle on the basis of its strengths than lose it on the basis of its mistakes.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

This story was originally published May 5, 2017 at 12:32 PM with the headline "Bill Virgin: West Coast ports have a lot riding on stable labor relations."