Tentative Agreement Reached on West Coast Ports Labor Contract

Acting Secretary of Labor Julie Su: “Collective bargaining — though sometimes difficult — works.”

Noting the role played by Acting U.S. Secretary of Labor Julie Su, the Pacific Maritime Association and the International Longshore and Warehouse Union (ILWU) on June 14 announced a tentative agreement on a new six-year contract covering workers at all 29 West Coast ports.

The parties say that they will not be releasing details of the agreement at this time and that it is subject to ratification by both parties.

“We are pleased to have reached an agreement that recognizes the heroic efforts and personal sacrifices of the ILWU workforce in keeping our ports operating,” said PMA President James McKenna and ILWU President Willie Adams in a joint statement. “We are also pleased to turn our full attention back to the operation of the West Coast ports.”

Acting Secretary of Labor Su released the following statement:

“This afternoon, the leaders of the International Longshore and Warehouse Union and the Pacific Maritime Association reached a tentative agreement covering 22,000 workers and 29 West Coast ports, demonstrating once again that collective bargaining — though sometimes difficult — works.

“Thanks to the hard work and perseverance of the leadership of the ILWU and the PMA, the tentative agreement delivers important stability for workers, for employers and for our country’s supply chain. This important milestone is welcome news to all, and on behalf of President Biden, we are pleased to congratulate both parties on what they have achieved.”

Su is well known to both sides in the West Coast ports dispute. Prior to joining the U.S. Department of Labor, she served as the secretary for the California Labor and Workforce Development Agency and, prior to that, served as California Labor Commissioner from 2011 through 2018.

She has been named one of the 50 most noteworthy women alumni of Harvard Law School and one of the 100 Most Influential People in Los Angeles in Los Angeles Magazine.

TD COWEN INSIGHT

“Following recent reports that negotiations took a left turn largely over compensation differences, we are encouraged to see an initial agreement reached, with the helping hand of Labor Secretary Julie Su,” commented TD Cowen Managing Director, Industrials – Airfreight & Surface Transportation and Railway Age Wall Street Contributing Editor Jason Seidl. “Details of the agreement are not yet published and the agreement is still subject to ratification (which took ~2.5 months in 2015). We expect the ports to get back to full operations in the immediate term as the fine print gets solidified. The White House issued a statement applauding both parties for their cooperation.

“We see Union Pacific as the largest beneficiary in our coverage, given its intermodal moves from the West Coast ports, followed by J.B. Hunt, Hub Group, Schneider National, CSX, Norfolk Southern and Knight-Swift Transportation Holdings, among others. Intermodal players should also benefit as shippers recoup comfort with the Port of LA/LB, which has seen a noteworthy decline in volumes, partly due to shippers de-risking their supply chains given uncertainty that was shrouding negotiations. As we have indicated earlier, we believe that more than 90% of freight that moved to the East Coast will move back to LA/LB given its natural and longstanding competitive advantages. The resolution should also improve mix as rail moves from the West Coast inland are longer hauls for the IMCs vs. East Coast moves. This should ultimately benefit the eastern rails as well, especially given that not all freight that shifted went to the rails due to the short lengths of haul.”

WHITE HOUSE STATEMENT

In a White House statement, President Biden said:

“As I have always said, collective bargaining works, and I congratulate both parties at the ports for reaching an agreement. I want to thank Acting Labor Secretary Julie Su who used her deep experience and judgment to keep the parties talking, working with them to reach an agreement after a long and sometimes acrimonious negotiation. Above all I congratulate the port workers, who have served heroically through the pandemic and the countless challenges it brought, and will finally get the pay, benefits, and quality of life they deserve.

“Julie Su has proven herself time and time again, both as Deputy Secretary working closely with Secretary Marty Walsh – and now as a leader who helped assure that our supply chains remain strong for America’s businesses, farmers, and working families.”

PORTS OF LA, LONG BEACH STATEMENTS

Port of Los Angeles Executive Director Gene Seroka: “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. We’re grateful to Acting Secretary of Labor Julie Su, ILWU International President Willie Adams and PMA President James McKenna for their leadership and resolve. 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 Trans-Pacific trade.”

Port of Long Beach: “The Port of Long Beach welcomes news of the tentative agreement and applauds the ILWU and PMA for this momentous achievement. This is great news for the West Coast ports and the supply chain all across America. The contract agreement will have a hugely beneficial impact to the U.S. economy, which depends on our ports and the trade they facilitate. The goods movement workforce and industries provide a crucial and often unheralded service to society by keeping cargo flowing and shelves stocked. The importance of this work cannot be overestimated, and we are fortunate to have so many dedicated individuals devoting their careers to it—people near and far. Our most sincere thanks go to the negotiators from both sides who worked so hard and diligently to reach this landmark agreement. We know the contract will pave the way for the San Pedro Bay ports complex to keep providing the top-notch service shippers have come to rely upon. You can always be sure that the Port of Long Beach is open for business.”

NRF URGES RAPID RATIFICATION

The tentative agreement came after the parties had been in negotiations since the labor contract initially expired in July 2022 and against a backdrop of rising sporadic disruptions at some terminals. The National Retail Federation (NRF) had warned that additional disruptions would force retailers and other important shipping partners to continue to shift cargo away from the West Coast ports.

“The West Coast ports are a critical artery for retailers and other businesses into the U.S. market,” said NRF President and CEO Matthew Shay in welcoming yesterday’s news. “We urge the parties to quickly ratify the tentative agreement to bring certainty back to the West Coast ports. It is essential to begin the negotiation process early for the next labor contract and avoid a future lapse in continuity.”