West Coast Port Employers Suspend Some Operations Amid Labor Dispute

Terminal operators at ports up and down the West Coast say they will temporarily suspend some operations for the weekend, citing “ongoing union slowdowns” that have allegedly “brought the ports almost to a standstill.”

In a statement Friday, the Pacific Maritime Association, which represents port employers on the West Coast, said they will suspend ship loading and unloading Saturday and Sunday but will allow “yard, rail and gate operations” to continue at the discretion of terminal management.

The announcement comes as contract negotiations between the PMA and the International Longshore and Warehouse Union, which come about every six years, have become tense again after a hopeful pause last month when it looked like the two sides might resolve their outstanding issues.

The parties have said they made progress since a federal mediator was called in last month, but they have yet to settle differences on several issues, including wages, pensions, health-care benefits, arbitration process rules and operations. The two sides have been trying to reach agreement on a new labor contract for nine months.

A spokeswoman for the ILWU said in an email Friday, “The PMA is playing a dangerous and unnecessary game of brinkmanship by idling vessels for two days in a not-too-disguised effort to intimidate the ILWU membership.”

On Thursday afternoon, the ILWU circulated photos of empty yards at the ports. President Robert McEllrath said in a statement accompanying the photos, “PMA is leaving ships at sea and claiming there’s no space on the docks, but there are acres of asphalt just waiting for the containers on those ships, and hundreds of longshore workers ready to unload them.”

As of Friday morning, 26 ships were waiting at anchor outside the ports of Los Angeles and Long Beach.

The failure to resolve the problems at the West Coast ports is causing widespread pain for shippers, retailers, meat and poultry companies, and manufacturers across the country. Railroads have been reducing service to the West Coast, and for months a growing lineup of ships has sat at anchor outside the ports of Los Angeles and Long Beach.

A settlement in the talks looked imminent a week ago, but “relations have really deteriorated very sharply,” said Jock O’Connell, an international trade economist, after Friday’s announcement by the PMA. “Now there is no end in sight.”

“It’s an ugly situation right now,” he said.

Mr. O’Connell also described the situation as a “lockout optional weekend” since the PMA is leaving it up to the different terminal operators to decide whether they want to lock out workers entirely or let them come in to do some work.

Not only have shippers been hurt by massive delays, but they have also been hit with charges assessed to hold containers, according to analysts at Cowen & Co., which reported that some facilities near the ports are running out of room to store the containers. “Shippers and investors have begun to fear for the worst,” the investment firm said in a report Friday.

Jonathan Gold of the National Retail Federation said in a statement Friday that the ILWU and PMA were “shooting themselves in the collective bargaining foot.” The West Coast port labor contract has been affecting “the entire supply chain—from agriculture to manufacturing and retail to transportation” for nine months, Mr. Gold said. “Enough is enough.”

Meanwhile, West Coast ports say they’re losing business. Lee Peterson, a spokesman for the Port of Long Beach, the second largest on the West Coast, said the longer the contract negotiations take, the more ships will be diverted to other ports on the East and Gulf Coasts. “That’s the main issue,” Mr. Peterson said, “what business are we losing because of this and will that business come back?” Mr. Peterson said the port isn’t a party in the contract negotiations, but it is “urging” both parties to reach an agreement. “That’s what we need to resolve the congestion going forward and to clear the backlog,” he said.

The West Coast port congestion could cost retailers as much as $29.6 billion this year, according to the results of new analysis released Friday night by Kurt Salmon, the global management consulting firm. “Recent earnings reports make clear that port issues are already causing headwinds for retailers and they’re bracing for gales,” a Kurt Salmon retail supply chain analyst, Frank Layo, said in a statement.

Adding in rerouting and carrying costs, missed sales opportunities and likely rate increases, the total cost to retailers could reach $36.9 billion this year, the firm said.

The West Coast port problems won’t end quickly, the firm warned, because the ports aren’t structured to manage the newer bigger ships and increases in cargo. This is leading to a “new normal” in transportation, Kurt Salmon’s Mr. Layo warned. “Consumers are going to feel it in the form of mass out-of-stocks and price increases if retailers don’t act quickly.”

Note: Betsy Morris contributed to this article.

Source: Wall Street Journal