31 August 2023 (Lloyd's List)- DOCKWORKERS on the US west coast have ratified the tentative labour agreement reached in June, sealing the deal on negotiations that began almost 14 months ago and left ports and shippers in limbo for months.

The six-year agreement, which was reached during a two-week period of coastwide labour action and with the assistance US acting labour secretary Julie Su, was ratified with 75% of the International Longshore and Warehouse Union’s rank and file, who began voting last week.

“The negotiations for this contract were protracted and challenging,” ILWU International President Willie Adams said in a statement posted on X, formerly known as twitter. “I am grateful to our rank and file for their strength, to our Negotiating Committee for their vision and tenacity, and to those that supported giving the ILWU and [Pacific Maritime Association] the space that we needed to get to this result.”

The protracted negotiations between the ILWU, which represents about 22,000 dockworkers in 29 west coast ports, and the PMA, which represents the employers, brought more uncertainty for shippers already scarred by the pandemic’s supply chain crisis. Many chose to divert their cargo to east and Gulf coast ports, accelerating a trend that has been ongoing for more than a decade, and bringing record cargo volumes to their terminals.

The contract, which runs runs until 2028 as it retroactively starts when the previous one expired last July, should help restore shippers’ confidence in west coast ports.

“This contract brings long-term stability and confidence to our customers as we re-double our efforts to bring more cargo back to the Port of Los Angeles, the premier gateway to and from the Pacific Rim,” port of Los Angeles executive director Gene Seroka said in a statement.

Some cargo that shifted eastwards is expected to return to the west coast ports, although the extent remains unclear. Jess Dankert, Retail Industry Leaders Association vice president for Supply Chain, told Lloyd’s List earlier this month that some shippers were waiting for the agreement to be ratified before rerouting their cargo back to the west coast.

That caution appeared warranted in July, when ILWU Canada’s contract caucus rejected a tentative agreement reached after two weeks of strike action on Canada’s west coast. The union’s rank and file rejected a second agreement, but ultimately ratified a third late in the month. Canadian business groups estimated the strikes disrupted the movement of nearly C$10bn of cargo.

The ILWU-PMA contract’s ratification is not expected to spur a dramatic reversal of cargo, as these eastward shifts were also happening independently of the labour situation. Moreover, investment made in setting up east and Gulf logistics networks will make it unattractive for some shippers to now uproot them.

Meanwhile, drought conditions in the Panama Canal have led to draught restrictions and increasing vessel congestion this summer in the crucial passage between the Atlantic and Pacific oceans. While this could ultimately become a decisive factor in shippers’ cargo routing decisions, container shipping has so far remained largely unscathed, and major east coast ports contacted by Lloyd’s List said they have not yet felt any impact from it.

However, the port of New York and New Jersey deputy director Michael Bozza told Lloyd’s List that they are “closely monitoring” the situation.

With an agreement in place between the ILWU and the PMA, attention can now turn to the east coast labour negotiations, although that master contract does not expire until September 2024.

Local negotiations between the International Longshoremen’s Association (ILA), which represents more than 60,000 longshore workers on the east and Gulf coasts, and their employers, the United States Maritime Alliance (USMX), began earlier this year, well ahead of the contract’s expiration.