Great news this week for supply chain managers: the ILWU, the labor union representing the U.S. West Coast’s longshoremen and dockworkers, has reached a tentative agreement with the PMA, the body that represents the interests of port and terminal operators and managers. The agreement, which still must be ratified by the members, will put in place a new six-year contract.

The previous contract expired last July and led to fears of unrest at the nation’s busiest ports as well as a diversion of cargo away from West Coast gateways. If ratified, the deal is reported to include a 32% pay increase through 2028 as well as a one-time “hero bonus” in recognition of the work done during the pandemic to keep cargo flowing.

It was previously reported that the ILWU had pushed to double their pay over the course of six years. It has also been reported that average pay, including overtime and bonuses, for longshoremen is over $200,000 per year. Trade groups, importers and government officials have all cheered the final chapters of this negotiation and insiders expect the deal to be closed in the next month or two.

Asian imports to the US witness growth

Preliminary reporting from Datamyne suggests that volumes into the U.S. from East Asia and South-Eastern Asia has increased for the third month in a row, growing 3.3% in May over April. West Coast ports benefited the most, showing an impressive 6.9% growth while East Coast ports fell slightly by 1.4%.



Previously, East Coast ports had outperformed West Coast ports by a wide margin, mainly due to the risks of labor unrest during the ILWU negotiations. Reporting is done based on arrival date and based on U.S. discharged cargo only.

Student loan payments to influence consumption

In a headwind for consumers, and more broadly for manufacturers, ocean carriers and importers, a recent report in the Wall Street Journal detailing the potential impact from student loan payments resuming suggests that “some Americans face a serious reckoning – and so do the places where they spend their money”.

The report goes on to detail that some 26.6 million Americans have student loans in forbearance thanks to the federal government's suspension of debt payments.

Bank of America estimates that the average impact to households will be nearly $200 per month once the “pause” is lifted. JP Morgan has suggested the impact at $10 billion per month. This compares to the roughly $35 billion that the U.S. Census Bureau says that Americans spend each month at department stores and on apparel, meaning the impact to demand could be quite large. 

Courtesy of our Kuehne+Nagel colleague William Hazlegrove, Sea Logistics Trade Lane Manager- Transpacific Eastbound