As U.S. West Coast Port Labor Contract Expiry Looms, Both Sides Vow To Keep Talking

The union and employers negotiating a new labor contract for more than 22,000 U.S. West Coast port workers said high-stakes talks that are being closely watched by industry and the White House will continue after the agreement expires late on Friday.

"While there will be no contract extension, cargo will keep moving, and normal operations will continue at the ports until an agreement can be reached," the Pacific Maritime Association (PMA) employer group and the International Longshore and Warehouse Union (ILWU) said in a joint statement.

"Both sides understand the strategic importance of the ports to the local, regional and US economies, and are mindful of the need to finalize a new coast-wide contract as soon as possible," PMA and ILWU said just hours ahead of the contract expiration at 5 p.m. PDT Friday (0000 GMT Saturday).

Earlier on Friday, more than 150 industry groups implored U.S. President Joe Biden to push for a smooth and swift resolution to the labor talks covering 29 Pacific Coast ports stretching from California to Washington State.

Groups representing industries from agriculture and apparel to trucking and toys requested that Biden work with PMA and ILWU to extend the current contract, commit to ongoing good-faith negotiations, and avoid any activity that would cause further disruptions.

The contract has been on Biden's radar for months, and he took the unusual step of meeting with the ILWU and PMA in Los Angeles on June 10.

Disruptions at the West Coast ocean trade gateways that handle almost 40% of U.S. imports could roil the nation's already battered supply chains, stoke inflation and threaten a weakening economy.

Any work slowdown or stoppages at those ports could send transportation costs even higher, exacerbating pressure on an economy that is sinking Biden's approval ratings.

When the contract expires, so does its "no strike" clause, Peter Tirschwell, vice president of maritime, trade & supply chain at S&P Global Market Intelligence.

"We've never had a White House that is all over these negotiations the way they are now," Tirschwell said.

The last West Coast port labor contract negotiation broke down in 2015 after nine months of talks. Dockworkers stopped work for eight days, a move that gummed up U.S. supply chains and siphoned an estimated $8 billion from the Southern California economy.

Automating the movement of containers at the ports, resulting in fewer jobs, appears to be a key issue in the talks, which have been ongoing since May. While both sides have not identified the issue specifically, they have released dueling studies on the impact of automation and traded barbs in the media.

In an interview with Reuters this week, U.S. Labor Secretary Marty Walsh said he checks in weekly with ILWU and the PMA.

Meanwhile, wary shippers are not taking any chances. They are routing cargo away from the West Coast to avoid potential labor-related slowdowns, particularly at the nation's busiest seaport complex at Los Angeles/Long Beach that handle nearly $500 billion in cargo annually. That is driving up their costs and contributing to backups at ports in New York/New Jersey, Savannah and Houston.