Everyone is well aware of the contract negotiations occurring between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) between 2014 and 2015. A possible slowdown of production at the ports is forcing the cargo to just sit there during the negotiations, limiting ocean freight shipping activity.
As a result of this potential slowdown, many ocean carriers eliminated scheduled sailings. After all, cargo has been backed up and behind schedule at the west coast ports. This means major inventory issues for companies big and small. It is projected that this could cost retailers $3.8 billion this year. Last month at the Port of Oakland, imports fell 39%. Even though there is not a full strike, if one did occur, it might cost the US economy $2.1 billion daily.
Contract negotiations between both sides included discussions on salaries, benefits and contracts. It was reported that the Pacific Maritime Association offered an annual wage increase of 3% for the next 5 years. However, there were other demands regarding arbitration that forced negotiations to continue. President Obama sent the Secretary of Labor, Perez, to speak with both parties for a resolution to fix this before the economy really suffers.
The good news is that by the end of February 2015, both sides agreed to end the slowdown with talks of a 5-year tentative settlement. Even if everything goes back to normal at the west coast ports, it could take 8 weeks to clear the backed up cargo. Shippers should speak to a trusted freight forwarder regarding their questions about the situation at these ports.