A union representing 22,000 dockworkers at 29 US West Coast ports and a body that represents employers have reached a tentative agreement after more than a year of negotiations, possibly ending months of labour disputes that could impact the nation’s economy.
The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA), which represents terminal employers and ocean carriers, have announced a tentative deal on a six-year contract that acting US labour secretary Julie Su helped put in place.
Both sides must ratify the agreement to make it official and are holding off on releasing details of the new contract.
“We are pleased to have reached an agreement that recognises the heroic efforts and personal sacrifices of the ILWU workforce in keeping our ports operating,” PMA president James McKenna and ILWU president Willie Adams said in a joint statement.
“We are also pleased to turn our full attention back to the operation of the West Coast ports.”
While the unionised dockworkers did not hold a strike, they reportedly skipped shifts and affected port operations to the extent that their actions could have eventually impacted shipping, Jefferies analyst Omar Nokta said.
“Disruption to supply chains likely would have been impacted materially by the labour dispute, but soft container import volumes in recent months have created enough ‘slack’ in the system,” he wrote in a note on Thursday.
“Freight rates actually declined over the past two weeks despite the uncertainty.”
The deal comes as the Baltic Exchange’s Freightos Baltic Index has shown significant freight rate volatility for transpacific container routes between Asia and the US West Coast.
Freight rates for the route from China and eastern Asia to North America’s West Coast improved 30% during the first week of June to $1,686 per feu on 6 June, but then they dropped to $1,557 per feu on 7 June before plummeting 20.3% on Thursday to $1,232 per feu.
Freight rates for the route going in the opposite direction gained 6% during the first week of June to $733 per feu but then slid 17.7% by Thursday to $603 per feu.
Rate fluctuations aside, Port of Los Angeles executive director Gene Seroka was just happy that the ILWU and the PMA had come to a tentative agreement.
“The tentative agreement between the International Longshore and Warehouse Union and the Pacific Maritime Association brings the stability and confidence that customers have been seeking,” he said in a statement.
“We look forward to collaborating with our partners in a renewed effort to bring back cargo and demonstrate why Los Angeles is the first choice for transpacific trade.”
