You will be redirected back to your article in seconds
Skip to main content

Why This Logistics Exec Says West Coast Dockworkers Won’t Strike

The threat of declining West Coast ports business should be enough to keep employers and dockworkers at the negotiating table and away from a strike. 

That’s the word from logistics veteran Dan Gardner who offered his take on the ongoing talks in a webinar Friday. 

Gardner is co-founder and executive vice president of Trade XCelerators LLC (TXC), a freight forwarder that helps shippers with ocean and air freight, U.S. Customs clearance, distribution, fulfillment and transportation services. 

The executive offered six reasons why he thinks labor will avoid a strike, with the two main ones related to the possible longer-term threat of lost business to the West Coast that would lead to a loss of leverage for the union.

The International Longshore and Warehouse Union (ILWU), which represents some 22,000 workers at the country’s 29 West Coast ports, is currently in talks with the Pacific Maritime Association (PMA). The PMA represents carriers and terminal operators in the negotiations. The previous contract expired July 1, with both sides having reinforced their commitment to getting a deal done with no disruption to cargo movement. 

Related Stories

A more recent scuffle over the awarding of work in the Pacific Northwest, however, has offered some cause for concern with the opening of a National Labor Relations Board (NLRB) case in late September. The ILWU said the case, brought by another union, takes time and attention away from the collective bargaining process.

Fears of cargo movement disruptions force shippers to divert their products elsewhere.

“Every time, a year or so before a contract is up for renewal, you start to see diversions,” Gardner said during his update. “And what that means is importers in the United States, instead of going to L.A./Long Beach from—whether it’s China, Vietnam, Australia, it doesn’t matter—will go all [by] water through the Panama Canal, which was widened and has been operating as a wider facility for, goodness, five, six years now [and] can take bigger ships.” 

Shippers re-routing that cargo can then go into Houston, Miami, New York/New Jersey, Charleston, Savannah and other East and Gulf coast ports as an alternative, Gardner added.  

“That’s happened all the time,” Gardner said. “It’s going to continue to happen and should be a cause for alarm for the entire trade community in Southern California, not just the union, because volumes are being siphoned off from the L.A./Long Beach trade community.” 

Nearshoring, on a related note, also presents enough cause for concern on the longer-term business strength of the West Coast ports to prod both sides in the collective bargaining process to secure a deal, Gardner went on to say. Nearshoring to places such as Mexico also poses the possibility of less cargo coming into the West Coast ports as brands look for sourcing alternatives away from China. 

“It’s lesser volume, so the leverage maybe that a union has may be less because of, not just one of these factors, but all of them taken together,” Gardner said. “At the very least, we as a trade community should be cognizant of these shifts and take them into consideration when we make decisions—strategic decisions, tactical decisions. But continued nearshoring will deplete the volumes routed via West Coast ports, especially L.A./Long Beach.” 

The sentiment also came with a tempering that new origins for sourcing also take time to ramp and don’t result in automatic implications for the trade community. 

“Don’t think for one minute that a company can just say oh, magically, ‘We’re going to start sourcing in Mexico.’ That’s not how that works,” Gardner said. “It takes at least two years, minimum two years, to develop a high-quality, high-volume, price-competitive relationship with a vendor anywhere, and that certainly includes Mexico.” 

He also pointed to the 11 countries in the Western hemisphere the U.S. has Free Trade Agreements (FTA) with as offering manufacturers attractive options in either moving away from or diversifying their sourcing from China. Places such as Colombia, Peru, Chile and Panama offer new trade routes. Additionally, moving west into places such as India, Bangladesh or Pakistan allows for cargo to travel through the Suez Canal and across the Atlantic into U.S. ports in Miami, Florida or Atlanta, Gardner said. 

“That’s been going on for some time; it will continue to go on,” he said of nearshoring’s implications for the West Coast ports. 

Those points were part of a list of reasons Gardner offered for why the trade community is not likely to see an ILWU strike. He also suggested, in his other points, carriers and terminal operators have plenty of profit from the height of the pandemic to address worker demands on pay and benefits, the automation topic will likely get “kicked down the road” to avoid any drawn-out dispute over technology and, in a worst-case scenario, the Biden administration would likely step in to prevent any major supply chain disruption. 

The ports of Los Angeles and Long Beach, the two major ports on the West Coast, this week reported their cargo figures for September. Both facilities saw declines in imports amid declines in consumer demand for goods as more people open their wallets to spending on services. 

The Port of Los Angeles said imports in September fell 14 percent year-over-year to 709,873 twenty-foot equivalent units (TEUs), while Long Beach said inbound containers for the month fell 7.4 percent from a year ago to 342,671. September is typically a busy month for ports as shippers bring in holiday merchandise. 

“There’s always a concern,” Port of Los Angeles executive director Gene Seroka said in a briefing this week, addressing the possibility of a more permanent move away from the West Coast ports. “You want to stay ahead of the market and ahead of the game. As cargo finds its way to other ports and gateways, it’s going to be a challenge to bring it back, but we’re going to do our level best on all areas and we’ve got a great coalition of partners to do just that, including our employers association and dockworkers that will be hungry to make sure that that cargo comes back as well.”