The tentative agreement reached between the ILWU and the PMA last week has averted a coastwide disruption across 29 ports on the US West Coast. While the agreement is yet to be ratified by ILWU members, the two sides expressed positive views of the proposed deal.
Dockworkers members of the ILWU carried out disruptive action at the port for a week, causing vessel delays, trucking gates closures and the shutdown of key container terminals, particularly in Long Beach, Oakland and Seattle.
Disruption impact
US news agency Bloomberg reported that the National Association of Manufacturers estimates “a shutdown at LA-Long Beach terminals would cost the country’s economy $500 million a day, with a hypothetical 15-day strike leading to 41,000 job losses.”
Thanks to an intervention by the US Administration, the union and management were able to avert the potential damage. However, the labour action did not pass without impact. As cited by Bloomberg, supply-chain data provider project44 found that imported containers stayed nearly five times longer at Seattle Port than the week before the disruption.
The firm added, “Dwell time for exports at the Port of Oakland was about 12 days as of 11 June, roughly double the wait from the week starting 28 May.”
In addition to the delay experienced on the West Coast, analysts believe the disruption increased shippers’ inclination to divert cargo to the East Coast. Cargo diversion has been an issue since workers’ contracts expired over a year ago.
Details of the tentative deal
The joint statement the ILWU and the PMA issued did not provide details about the tentative agreement. However, the US media has extensively reported on the salary increases and bonuses ILWU workers will receive.
According to the Journal of Commerce (JOC), the union brought the PMA to agree on a 32% wage increase and a $70 million bonus. The new deal, said to cover a six-year contract period, includes “a $4.62-per-hour wage increase in the first year, with increases of $2 per hour in each of the remaining five years of the contract.”
Then comes the $70 million “hero bonus,” compensation for working through the tough pandemic years. While this number seems to be very high, it will be divided equally across 20,000 members, resulting in an average of about $3500 per member.
Some industry experts pointed to the relatively high wages the ILWU members already earn compared to other professions in the United States. A report by Freight Waves revealed full-time longshore workers earned an average of about $197,500 in 2022, while clerks earned an average of $220,000. The report added, “The U.S. Bureau of Labor Statistics compiles data on average annual wages by profession. West Coast dockworkers rank toward the top when compared to the government stats.”
On the other hand, other analysts believe the gradual increases the deal entails are not as excessive as portrayed. Shipping expert and analyst Lars Jensen commented on the developments in a LinkedIn post: “Setting aside any discussion related to the baseline magnitude of the average salaries, the agreement details mentioned here do not appear excessive as it pertains to relative increases.”
Current situation at ports
Most recent Seaexplorer data reveals that the number of vessels anchored outside Los Angeles and Long Beach ports witnessed a slight increase over the disruption period. Today’s data shows eleven vessels anchored outside the port complex with an estimated blocked capacity of 74,330 TEU.
The increase was more visible at Oakland Port where the number of anchored vessels increased from two vessels at the beginning of the action (9 June) to 12 vessels over the past weekend (18 June).
