Dive Brief:

• Roughly 67% of workers associated with the International Longshore and Warehouse Union (ILWU) voted to approve a three-year contract extension with the Pacific Maritime Association (PMA), which represents their West Coast port employers, according to early ballot reports.
• The extension would ensure labor peace in the West Coast until at least July 1, 2022, according to JOC.com. The ILWU and PMA began to talk about an extension as early as March 2015, to avoid the negotiating setbacks that led to severe disruptions in 2014 and 2015.
• The extended contract includes pay raises, continued healthcare benefits and pension increases for union members. Now, JOC.com notes shippers are shifting their sights to the East Coast's ports and dockworkers, whose contract expires September 30, 2018.

Dive Insight:

The news of a contract extension is a welcome sign for all supply chain stakeholders, which have nervously watched as labor negotiations unfold over the past few years.

The specter of the 2014-2015 West Coast port disruptions — which ended by intervention of then-President Obama and cost the U.S. billions of dollars — has haunted ports, who suffered from shippers' lost faith. A survey conducted a year later revealed the high level of dissatisfaction produced by the strikes, resulting in a lowered level of trust and satisfaction regarding ongoing business. Customers had had to diversify port usage, while others shifted from ocean to air freight at significant cost.

“Nobody wants to see a repeat of the problems that were experienced in 2014-2015, and this remarkable sign of good faith on the part of both labor and management ensures that such a situation will be avoided," said the National Retail Federation's Vice President for Supply Chain and Customs Policy, Jonathan Gold. Indeed, once the new contract is ratified, the West Coast ports will have a renewed budget to focus on other, needed improvements for the next five years.

The same cannot be said for East Coast ports, whose contract expires in 2018 and are currently mired in disputes with the International Longshoremen's Association.

Workers associated with the ILA threatened to strike in February, prompting the NRF to issue another press release, noting, "Thousands of companies and millions of workers rely on these ports and any disruption to their activity even for a day could have a negative impact on the U.S. economy." While the strike was eventually called off, the underlying issues (automation, regulations) remain unresolved.

Regardless, the news of a West Coast agreement should relieve shippers who rely on the ocean freight for their products. Stability is here, at least officially.