Industry Official Would Be ‘Stunned’ If Port Labor Negotiations Cause Disruptions

Ongoing labor negotiations between West Coast ports and their dockworkers’ union are unlikely to cause major disruptions, said David Bennett, chief commercial officer of Farrow, a customs broker and logistics provider. But that doesn’t mean shippers should expect the negotiations to wrap up anytime soon. “I don't think we'll have a contract before September, to be honest with you,” Bennett said during a July 14 webinar hosted by the Journal of Commerce.

Trade groups and lawmakers have urged the Biden administration to work closer with the International Longshore and Warehouse Union and the Pacific Maritime Association as they work out a new contract (see 2207010036 and 2206080056). Some trade associations fear U.S. shippers and traders could face new, worsening logistics delays if an agreement isn't reached (see 2205230044).

But even though the contract expired earlier this month, both the IWU and the terminals have agreed to continue to move cargo and avoid a strike or lockout. “I would be very disappointed and stunned if we have any disruptions on the West Coast,” Bennett said. “I'm not at all surprised at where we're at, based on my previous experiences in this space of not having a contract now.”

A more pressing issue, Bennett said, is the rail congestion in both the U.S. and Canada. A recent increase in rail service disruptions, caused by backlogs at the Port of Los Angeles and elsewhere, are delaying U.S. cargo flows, Reuters reported July 13. The report said more than 29,000 rail containers are stuck at Southern California ports.

“This is ugly,” Bennett said. “I've got situations right now where I've got factories shut down waiting for parts that are stuck and buried in L.A. that can't move because there's no rail cars.” Bennett also said there is a shortage in chassis, which is stopping rail containers from being picked up. “It's just a bloody mess,” he said. “I don't know any other way to describe it.”

Shippers are also closely monitoring whether carriers or terminals are changing their practices as a result of the Ocean Shipping Reform Act, said Jonathan Gold, the National Retail Federation’s vice president of supply chain and customs policy. Several OSRA provisions took effect immediately after it was signed into law in June (see 2206160064), including measures related to demurrage and detention invoices (see 2206240055).

“We've already seen and heard of terminals and carriers changing some of the billing requirements and who's paying and how they're paying,” Gold said. “I think a lot of that still needs to get figured out.”

He said the FMC is paying “a lot more attention” to unfair detention and demurrage charges. The commission last month approved a $2 million settlement agreement with Hapag-Lloyd for alleged shipping violations involving the company’s billing practices (see 2206090020). “My members are very eager to see that that process go forward,” Gold said.