The deal, confirmed in a joint statement by the two sides, was reached after the U.S. labor secretary arrived in San Francisco this week to help broker negotiations that had dragged on for nine months between the shippers and the International Longshore and Warehouse Union.
Tensions arising from the talks have played out in worsening cargo congestion that has slowed freight traffic at the ports, which handle nearly half of all U.S. maritime trade and more than 70 percent of the nation’s imports from Asia.
More recently, the shipping companies have sharply curtailed operations at the marine terminals, suspending loading and unloading of cargo vessels for night shifts, holidays and weekends at the five busiest ports.
Labor Secretary Thomas Perez was sent to California as an emissary of President Barack Obama, who had come under mounting political pressure to intervene in a conflict that by some estimates could have ended up costing the U.S. economy billions of dollars.
According to big-city mayors briefed by Perez on Thursday, the third day of his involvement, the labor secretary suggested the Obama administration intended to invite leaders from both sides to Washington next week to continue the talks if a deal were not reached on Friday.
Retailers Welcome West Coast Port Contract Agreement
Congestion, Slowdowns and Suspensions Impacted Entire Supply Chain
The National Retail Federation issued the following statement today from President and CEO Matthew Shay on reports that the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) have reached a new five-year contract agreement:
“We congratulate the ILWU and PMA for finally coming to agreement on a new labor contract. It is now time for the parties to quickly ratify the deal and immediately focus on clearing out the crisis-level congestion and backlog at the ports.
“We also thank Secretary Perez and the administration for engaging the parties on this critically important economic and supply chain priority.
“The congestion, slowdowns and suspensions over the last few months have had a significant economic impact on the entire supply chain and those who rely on the West Coast ports to move their goods and products around the world and throughout the country. The agricultural, manufacturing, retailing and transportation industries have all suffered due to the nine-month long contract negotiations.
“As we welcome today’s news, we must dedicate ourselves to finding a new way to ensure that this nightmare scenario is not repeated again. If we are to truly have modern international trade, supply chain and transportation systems, we must develop a better process for contract negotiations moving forward. We must commit whatever resources necessary to ensure that this will not happen again.”
The National Retail Federation
The 20,000 dockworkers covered by the tentative labor accord have been without a contract since July.
Bargaining, said to have bogged down earlier this week over the issue of binding arbitration, resumed on Friday after Perez met in the morning with the principals, then exited the talks, according to one source close to the situation.
Announcement of an agreement between the union and the shippers on a new five-year labor contract came hours later. The deal is subject to ratification by both parties. No details of the terms were immediately disclosed.
Disruptions at the ports, blamed by each side on the other, have reverberated throughout the U.S. economy, extending to agriculture, manufacturing, retail and transportation.
Cargo loads that would normally take a few days to clear the ports have faced lag times of two weeks or more as dozens of inbound freighters stacked up at anchor along the coast, waiting for berths to open.
A longer-term concern has been that U.S. export business lost to other countries and ports may not return once the West Coast dock worker crisis ends.
Port officials have said it will take many weeks to clear the immediate backlog of cargo containers piled up on the docks once a settlement is reached, and several months for freight traffic to return to a normal rhythm.
Related: How the West Coast Ports Chaos WILL Impact Your Supply Chain