Bill Virgin: Anniversary recalls another headline-making time for port

While the Port of Tacoma and the community do battle over the proposed liquid methanol plant, with all the attendant issues involving economic development and the future of the Tideflats, there’s been some interesting recent news involving that other activity the port is involved in: the loading and unloading of ships.

Or, as it pertains to this column, the nonloading and unloading of ships, which is what occurred a year ago at West Coast ports including Tacoma and Seattle. Remember that? In the midst of a dispute between the Pacific Maritime Association, which represents the terminal operators and stevedoring companies that run port facilities, and the International Longshore and Warehouse Union, which represents workers, cargo volumes slumped. The PMA blamed the union; the ILWU blamed congestion issues that operators had contributed to.

Trucks waiting to deliver or fetch cargo backed up, shipments sat for weeks, shippers and customers of perishable and seasonal goods lost out entirely and the West Coast ports took a serious reputational hit for reliability and efficiency.

It’s rarely a good time for that kind of event, but late 2014/early 2015 was an especially bad one, what with shippers losing millions of dollars in business just as they were trying to climb out of the wreckage of the recession and the ports facing increased competition from other options (Canada, the Gulf and East Coasts). Workers too stood to lose too, not only because of competition from other ports but also from the increasingly attractive and cost-competitive option of automation.

Just how bad was the hit? The Washington Council on International Trade, to mark the one-year anniversary of the port slowdown, came up with a number of $769.5 million for Washington businesses, representing “the sum of net delinquent shipments and additional costs, specifically warehousing and truck idling fees.”

Such estimates should never be taken as exact. Some shipments did find their way to customers eventually (some went by air freight, albeit at a higher cost). Some figured out workarounds or did without, and some might have been missed by the survey. The number could be higher or lower.

Even harder to quantify is the long-term cost, but WCIT makes a valid point that the bill could prove to be the more expensive one. The findings “represent only the short-term costs Washington businesses incurred due to the delays. Future costs, such as damaged client relations resulting in the loss of business or sole source contracts, can have long-lasting impacts on Washington businesses” and those could be “potentially much greater than the near-term costs presented above.”

Whatever the number, the shipping community likely concluded it’s not going through that again. Now the participants are coming to the same realization.

The Journal of Commerce, the trade publication for the shipping industry, reported that the heads of the PMA and the ILWU, appearing together on stage at a conference, publicly floated the idea of a contract extension beyond the current contract’s scheduled expiration on July 1, 2019.

It’s not a unique idea. The Journal of Commerce noted that the International Longshoremen’s Association and the United States Maritime Alliance, which mirror the PMA-ILWU relationship on the Gulf and East coasts, have talked about a contract extension of their own, beyond the current agreement’s expiration in 2018.

That would up the competitive pressure on West Coast port operators and the union, if shippers have as an option ports that are closer to end markets (avoiding highway and rail snarls), can be accessed by an expanded Panama Canal and offer labor peace.

There’s some local precedent for a contract extension, in another industry. Both the Machinists union and SPEEA have ratified contract extensions with The Boeing Co. to ensure reliability of aircraft deliveries, no small consideration in the bruising competition with Airbus.

Sounds great, but floating the idea is a vastly easier proposition than getting buy-in and ratification from membership of the two organizations. ILWU’s rank and file can be an independent lot, and they’ll want to see clear benefits and gains in exchange for giving up the power of work stoppages and slowdowns.

Here again the Boeing/IAM/SPEEA parallel is instructive. Members of both unions are still smarting, and publicly so, over what they see as an unbalanced exchange, agreeing to contract extensions to give Boeing and themselves workplace and workforce stability, only to have Boeing move work elsewhere and cut jobs in the Puget Sound region.

Nor is time necessarily a friend. The industry is changing rapidly because of short-term factors (China’s slowdown and the collapse of the global commodities market) and long-term trends (mergers between the major shipping lines, idling and reduction of capacity, the aforementioned canal expansion). Port operators and unions need to signal they understand that and are coming up with answers, lest they get to 2019 and find that no one cares if they’re friends or foes because the business sailed somewhere else.

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 March 5, 2016 at 9:08 AM with the headline "Bill Virgin: Anniversary recalls another headline-making time for port."