Guest: West Coast ports are in rough seas due to slowdown
Time for port traffic to get moving again. Guest columnist Ron Brinson calls for more leaders to call for the Pacific Maritime Association and the International Longshore and Warehouse Union to settle their contract.
Special to The Seattle Times
A ROILING crisis of congestion and labor uncertainties grips major container ports, from San Pedro Bay to Puget Sound.
The West Coast maritime industry has spun itself into a perfect storm of unreliability — once again.
Cargo customers, ranging from retail and manufacturing importers to agricultural exporters, are furious.
Christmas trees and fresh apple-export shipments have been left to decay at terminals. In December, McDonald’s briefly had to ration its trademark French fries in Japanese outlets until U.S. East Coast ports stepped up. Major retailers are scrambling with costly contingency plans. Weyerhaeuser has laid off workers at its Longview plant.
Even the U.S. Department of Defense is facing unusual logistical challenges, having to airlift perishable supplies to commissaries and bases in the Pacific region. The additional costs are about $300,000 a week.
This is a big deal, nationally. The West Coast maritime gateway handles more than 60 percent of U.S. container cargo, valued at 12.5 percent of gross domestic product, according to the National Association of Manufacturers. The Federal Reserve this week noted the congestion effects in its “Beige Book,” a summary of factors shaping economic trends.
But it’s an even bigger deal for public port authority constituents who have invested billions in the West Coast ports that bind this now challenged industry. Implications of lost business and a reputation of unreliability of an entire port region are just not good for taxpayer investors.
Is this gridlock the product of too many too-big ships descending on suddenly inadequate port terminals? Or, is it the result of a thoughtless new business model for the most fundamental of container-moving equipment?
Or, is this bare-knuckled tactics at work as the Pacific Maritime Association, which represents the terminal operators and shipping companies, and the International Longshore and Warehouse Union pound out a new contract?
Think “all of the above,” folks. Think “perfect storm.”
Here’s a fearless prediction: It is certain the ILWU and the PMA will reach a new agreement, and it is equally as certain that congestion and inefficiencies will resolve shortly thereafter.
The union and the PMA understand the stakes, and they understand each other. Beyond their propensity for remarkably myopic, finger-pointing bargaining tactics, these parties have worked together for decades to improve productivity and solve efficiency problems at some of the world’s best ports.
When a new contract finally is in place, a shaken West Coast maritime community will ponder why this bitter experience had to evolve into another stain of unreliability. The same industry asked similar questions in 2002 following a 10-day port “lockout” that cost the national economy billions daily.
East Coast ports are gaining notable volumes of diverted West Coast cargoes — and posting record months for containerized cargo movements. The Port of Charleston, in South Carolina, for example, had a 15 percent container-business increase in December. Jim Newsome, president and chief executive of the South Carolina State Ports Authority, said West Coast diversions “are definitely a part of this.”
Newsome, a former chief executive of Hapag-Lloyd’s North America operations, added thoughtfully, “Overall, none of what’s happening on the West Coast is good for the shipping or port industry because it just creates supply chain risk.”
ILWU members enjoy good pay, good benefits packages and good work environment rules. The union is a leader, too, in training and safety and technology applications, and it cares about productivity measurements. The PMA no doubt is pressing the position of ocean shipping companies worldwide who demand predictability in labor-cost projections. Health insurance and retirement benefits are, by definition, cost factors with inherent unpredictability.
But it is an underreported reality that public port authorities, and their taxpaying constituents, are bottom-line stakeholders in this capital-intensive seaport industry. These agencies build, equip and maintain the giant state-of-the-art terminal facilities that form the West Coast port gateway. Port authorities also partner with the federal government in creating and maintaining shipping channels in West Coast harbors.
We’re talking about billions of public dollars — and billions more on the way.
The Port of Long Beach, Calif., has a 10-year, $4.4 billion capital-investment program under way. The PMA effectively shut down berth-side port operations at Long Beach last Monday, explaining that terminal operators needed to concentrate on moving containers out of the congested terminals.
For decades, King County taxpayers in the Port of Seattle’s district have invested property taxes in the Port. Property owners pay about 23 cents per $1,000 of valuation per year — or $92 for a $400,000 home. Washington is the nation’s most trade-dependent state, and King County taxpayers have invested billions in Seattle Port operations. Recent queues of giant container ships at Elliott Bay and spirited union rallies are unsettling reminders that King County seaport operations are fully dependent on human labor — and on the mutual abilities of management and unions to reach agreements without unduly disrupting the port’s customer base.
Labor and management relationships are often testy and create occasional upsets at America’s ports. But the nation has enjoyed 37 years of port operations without major coastal range stoppages — except for the 10 days of unpleasantness in 2002 on the West Coast. Whatever this current experience is to be called retrospectively, it is a very public crisis.
But there are no seats for the “public” at the ILWU-PMA negotiating table — a reality of waterfront labor and management operations.
And that’s not going to change. That means representatives of the public’s interest must do some old-fashioned jawboning about the soaring consequences of this crisis.
Some elected officials and port authority executives have done just that. But too many have not, cautiously avoiding proximity to the political activism of both sides — and staying out of the crossfire.
A chorus of reality messaging from informed leaders would remind the negotiating parties that customers all over America — and taxpayers in their own backyards — are eager for this crisis to move beyond congestion-causing tactics and on to another cycle of restoring the reliability of the West Coast’s port industry.
Ron Brinson, is a Charleston, S.C.-based port authority governance consultant. He was president and CEO of the American Association of Port Authorities and president and CEO of the Port of New Orleans.