ILWU responds to PMA contract proposal

Seven months of West Coast dockworker contract negotiations may be winding down following a union caucus and the back-and-forth discussions of a potential offer.

The International Longshore and Warehouse Union (ILWU) is currently waiting for the Pacific Maritime Association (PMA) to respond to the latest communication between the two groups in the long and winding negotiation process, according to the Journal of Commerce. Earlier in the month, the PMA forwarded a contract offer to the union, ILWU spokesman Craig Merrilees explained. Negotiators from the union pored over the new proposal during the ILWU caucus this weekend, and have returned it to the management group with comments.

President of the PMA Steve Getzug confirmed to the publication that the association sent a contract over, adding that the management group’s negotiators will take a look at the ILWU’s response and get back to the union later in the week.

Length of the negotiations has many worried

The ILWU caucus has been looked upon as a potentially game-changing moment in the negotiations process – an event that might push the discussions forward after an extended impasse in talks between the two groups. The latest round of negotiations has lasted longer than previous attempts at striking an agreement in 2002 and 2008, the Journal of Commerce explained. In 2002 discussions eventually devolved into a 10-day long lockout, while six years later were completed without a work stoppage. The length of the negotiations this time around has worried shippers, who have requested federal intervention in the discussions.

As the PMA and ILWU consider the latest iteration of a contract, ports on the West Coast continue to struggle with congestion issues that have plagued them for some time now, the Journal of Commerce explained. Last Friday, 13 containerships were anchored off the coast of the Los Angeles-Long Beach port complex awaiting space to berth, beating out the two-year high of 11 ships recorded on Oct. 27. If an agreement can’t be reached between the two groups following the caucus, then the delays will likely continue into 2015.

The congestion issues have hit shippers hard. In Japan, McDonalds is dealing with a french fry shortage, while the Golden State Warriors NBA team was forced to hand out 10,000 IOUs to fans who attended one game expecting bobbleheads as part of a giveaway.

The ILWU caucus of about 90 delegates is now waiting for the PMA’s response. The contract still has concerns from both sides that need to be addressed, though no details on the issues have been released.

Shippers already taking a hit due to congestion

Already, retailers’ fourth quarter results are likely to take a hit from the congestion issues at West Coast ports, The Journal of Commerce noted. Shippers are dealing with the extra costs of congestion, including lost sales and the diversion of cargo. Lululemon Athletica was the most recent company to announce the detrimental affect of port delays on its business, explaining that its year-end revenue forecast will likely fall by as much as $10 million.

“Our business is sensitive to this disruption since we schedule a constant replenishment of our inventory and we still need product drawn at our store,” Laurent Potdevin, CEO of the clothing company, said in a Dec. 11 earnings call, according to the publication. “With the slowdown at the West Coast port and units still underwater, we are actively implementing a number of strategies to mitigate the delivery issues.”

John Currie, the CFO of Lululemon, explained that while the company’s inventory had remained well-stocked through November, port congestion issues dragging into December had executives anxious about stock levels. The athletic apparel company isn’t alone in these struggles. A number of shippers have experienced problems similar to that of Lululemon.

The National Retail Federation and National Association of Manufacturers stated in a study earlier this year that a shutdown of ports could prove significantly detrimental, according to The Trucker. Shutdowns on the West Coast could cost the U.S. economy up to $2 billion per day.

Rep. Bill Shuster, the chairman of the House Transportation and Infrastructure Committee, wrote President Barack Obama earlier this month requesting federal intervention in discussions between the ILWU and PMA.

“Labor contract negotiations between these two entities began in the spring, and the master contract covering nearly 20,000 dock workers at the 29 container ports on the West Coast expired on July 1, 2014,” the Pennsylvania Republican wrote. “Since that point, the ongoing negotiations have deteriorated in recent weeks and alleged slowdowns and crisis level congestion have occurred up and down the West Coast.”

The federal government can only intervene in negotiations if the two groups – the ILWU and PMA – themselves request assistance. If the ILWU caucus recommends that the union accept the whatever the PMA’s next offer may be, then the group’s entire membership will vote on the issue, which can take several weeks.