Tentative deal reached for US West Coast ports

This December 4, 2012 file photo shows a ship with containers aboard moored under cranes at the Port of Los Angeles in southern California. US West Coast dockworkers and port operators have reached a tentative deal on a new labour contract, averting a shutdown that would have hit about half the country’s trade.

Reuters/Los AngelesA group of shipping companies and a powerful dockworkers union reached a tentative labour deal late on Friday after nine months of negotiations, settling a dispute that disrupted the flow of cargo through 29 US West Coast ports and snarled trans-Pacific maritime trade with Asia.The agreement, confirmed in a joint statement by the two sides, was reached three days after US Labor Secretary Thomas Perez arrived in San Francisco to broker a deal with the help of a federal mediator who had joined the talks six weeks earlier.The White House called the deal “a huge relief” for the economy, businesses and workers.President Barack Obama urged “the parties to work together to clear out the backlogs and congestion in the West Coast ports as they finalise their agreement”, the White House said in a statement.The 20,000 dockworkers covered by the tentative five-year labour accord have been without a contract since July.The dispute had reverberated throughout the US economy, extending to agriculture, manufacturing, retail and transportation.Supply chain disruptions have hit from automakers to consumers of french-fried potatoes at McDonald’s Corporation restaurants in Japan.Wal-Mart Stores Incorporated, the world’s largest retailer, said on Thursday that the dispute had caused delays of “pockets of merchandise” and that the potential cost had been included in the company’s earnings forecasts this week.The deal was welcomed by organisations such as the National Association of Manufacturers and the US Meat Export Federation.US meat exporters have had to put millions of pounds of beef and pork into cold storage, ship by air or use Canadian or Mexican ports, rather than send it out through West Coast ports.Tyson Foods Incorporated and Cargill Incorporated are among the leading US pork and beef producers.Tensions arising from the talks have played out since last fall in chronic cargo backups that have increasingly slowed freight traffic at the ports.According to the American Association of Port Authorities, some $3.8bn worth of goods move in and out of US seaports each day.The West Coast ports handle nearly half of all US maritime trade and more than 70% of the country’s Asian imports.Shipping companies have sharply curtailed operations at the marine terminals, suspending loading and unloading of cargo vessels for night shifts, holidays and weekends at the five busiest ports.Perez said that as part of Friday’s accord, the International Longshore and Warehouse Union and the shippers’ bargaining agent, the Pacific Maritime Association (PMA), agreed to fully restore all port operations from yesterday evening.The deal is subject to ratification by the union rank-and-file and the individual shipping lines and terminal operators that make up the PMA. No details of the terms were immediately revealed.Perez was sent to California on Tuesday as an emissary for Obama, who had come under mounting political pressure to intervene in a labour conflict that by some estimates could have ended up costing the US economy billions of dollars.Perez said he told the union and management negotiators: “You have an obligation to resolve this matter quickly because too many people and businesses are suffering.”The principal sticking point when he first joined the talks, Perez told reporters after the agreement, was the arbitration system for resolving workplace disputes under the contract.He did not disclose how that impasse was overcome but said the parties agreed to changes that would improve the system while “ensuring fairness to both sides”.Perez, who had been joined at times during the week by US Commerce Secretary Penny Pritzker and Los Angeles Mayor Eric Garcetti, exited the talks on Friday morning after one last meeting with both sides.Announcement of an agreement came hours later.Disruptions at the ports have been blamed by each side on the other as pressure tactics.Cargo loads have faced lag times of two weeks or more as dozens of inbound freighters stacked up at anchor along the coast, waiting for berths to open.California farmers were especially hard hit, with port disruptions threatening perishable goods headed to overseas markets and export losses estimated to be running at hundreds of millions of dollars a week.Japan’s Honda Motor Company said earlier this week that it would slow production at some of its North American plants due to delays in parts shipments from Asia while Toyota Motor Corporation said it had reduced overtime at some factories.Nissan Motor Company Ltd said it had been somewhat affected.Honda and other car manufacturers said they were switching to higher-cost air freight to minimise delivery slowdowns.Singapore-listed Neptune Orient Lines’ container shipping unit partly blamed the congestion for an 8% decline in its fourth quarter.Port officials have said it would take six to eight weeks to clear the immediate backlog of cargo containers piled up on the docks and several months for freight traffic to return to a normal rhythm once the dispute was settled.Besides work slowdowns the companies accused the union of staging to gain bargaining leverage and the curtailed operations the union said were designed to squeeze its members, the West Coast waterfront still faces a range of systemic problems cited by port authorities as factors in the backups.Still, the settlement averted a worst-case scenario of the labour dispute devolving into a full-scale, extended shutdown of the ports.