The Breakdown

Explaining Southern California's economy

Dockworkers contract at West Coast ports expires, but negotiations continue and cargo keeps moving

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A labor contract covering about 20,000 dockworkers at west coast ports expired at 5:00 p.m. Tuesday, but cargo continued to move, as negotiators on both sides said they'll keep talking on a new contract.

The Pacific Maritime Association (PMA) and International Longshore and Warehouse Workers Union (ILWU) have been in contract talks since May 12.  They issued a joint statement shortly after 5pm Tuesday: 

While there will be no contract extension, cargo will keep moving, and normal operations will continue at the ports until an agreement can be reached...Both sides understand the strategic importance of the ports to the local, regional and US economies, and are mindful of the need to finalize a new coast-wide contract as soon as possible to ensure continuing confidence in the West Coast ports and avoid any disruption to the jobs and commerce they support.  

Neither side had raised the possibility of a strike or lock-out, but memories of past labor stand-offs at the ports has caused anxiety among groups with ties to the industry.  Retailers began moving goods through the ports early, causing an uptick in cargo volumes

The contract covers the work of around 10,000 dockworkers at the ports of LA and Long Beach. Together, the two ports form the busiest port complex in the country, handling more than a third of the trade between the U.S. and China.

"It’s not just a matter of what happens at the port. It’s a matter of what happens in the broader supply chain," said Tom O’Brien of the Center for International Trade and Transportation at Cal-State Long Beach.

"Whether it's a strike or lock-out, goods aren't moving off ships onto the docks.  That means truckers can't pick up those goods, that means they can't be processed at distribution centers or warehouses," O'Brien said. 

The Los Angeles County Economic Development Corporation estimates more than 163,000 jobs in LA County alone are tied to trade and distribution of cargo.  President Bill Allen said $415 billion in goods moved through the ports of LA and Long Beach last year.

"The Ports of LA and Long Beach are investing about $5 billion to remain competitive, deepening and widening channels, improving terminals," Allen told CNBC. "We are determined to continue to be the best way to move goods in and out of the U.S. economy."

O’Brien said a strike or lock-out could put LA-Long Beach's supremacy at risk and jeopardize any West Coast port’s reputation as a viable gateway to the U.S. 

"Remember, shippers always have options, and they will look for the path of least resistance," O'Brien told KPCC.  "Right now, part of determining where the path of least resistance is the potential for labor unrest."

Shippers might find those paths at ports on other U.S. coasts, as well as Canada and Mexico. 

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