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West Coast Ports Face Looming Strike: Tom’s Takes

A,Cargo,Vessel,Full,Of,Containers,Sits,Docked,At,Port.

Contract talks will begin on May 12 between the International Longshoreman and Warehousing Union (IWLU) and the Pacific Maritime Association (PMA), following the rejection by the IWLU for a second contract extension to their current contact dating back to 2015.  With profits soaring to record levels for ocean carriers in 2021 to an estimated $190B, record inflation rates in the first quarter of 2022, eroding household income from the annual wage increases guaranteed in the current contract and increased working hours in the LA-based ports to 24/7, brokered by Biden administration in mid-October 2021. The IWLU and PMA will negotiate the key issues of wages, benefits, working hours and the expanded use of automation within the ports.

Concerns Over Labor Reductions With Continued Port Automation Projects

Whether through layoffs or the reduced need to replace employees who retire from the longshore workforce, the IWLU has concerns over overall labor reductions. This is due to automation expansion within the ports on the rise, even though automation within the ports was approved in the 2008 contract.

The IWLU represents over 20,000 dockworkers spread out across the 29 west coast ports with the 70 ocean carriers and terminal operators of those ports represented by the PMA.

The current contract was ratified in February 2015 and was extended in 2019 for three additional years to June 30, 2022 in exchange for higher wages and pension benefits to help avoid cargo congestion issues in 2019. Congestion is still prevalent in 2022 due to supply chain disruptions ranging from port congestion to lack of shipping containers and truck drivers, just to name a few

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Tom’s Take: “If the IWLU and PMA are unable to reach an agreement this summer, labor slowdowns in the West Coast ports may result in further exacerbating of the movement of goods via transportation carriers to distribution center hubs throughout the U.S. Supply chain planners should consider Gulf Coast and East Coast ports as alternative points of entry to ensure inventory on hand, but likely at higher transportation costs due to longer transit times from Asian points of departure. Retailers and consumers would be negatively impacted by less inventory and higher prices which could lead to continued inflation in the U.S. through the holiday 2022 season.”

California Labor Law AB 701; What You Need to Know

In September 2021, the State of California passed AB 701, a law that targets distribution centers of the state and their usage of quotas or labor standards. Here are the three key points the law requires:

  • The law applies to companies that operate warehouses with more than 100 workers, including third party, temporary or part-time in a single facility; or companies with more than 1,000 workers at one or more distribution centers within the state
  • The distribution centers that apply, per the North American Industry Classification System (NAISC) Codes are:
    • 493110 – General Warehousing and Storage
    • 423 – Merchant Wholesalers, Durable Goods
    • 424 – Merchant Wholesalers, Nondurable Goods
    • 454110 – Electronic Shopping and Mail Order Houses
  • Companies must disclose upon hire or within 30 days of hire a written description of each quota and the “quantified number of tasks to be performed or materials to be produced or handled, within the defined timer period, and any potential adverse employment action that could result from failure to meet the quota.”
  • Employees are not be required to meet the quotas if it prevents them from taking an authorized meals, breaks, or rest periods; use of bathroom facilities, including travel time to and from, or violating health and safety laws.

Additional details of AB 701 can be found here.

Tom’s Take: “California-based employers that establish and enforce production quotas, or labor standards, need to be transparent with their associates on how the quotas were established, what jobs that they apply to, how they are measured and what training they will be provided to ensure their success. A properly implemented labor management and systems implementation that addresses the engineering, training and change management components will provide the foundation for meeting AB 701 requirements.  

Additionally, it’s incumbent that operations partner with human capital to manage their employee productivity programs to ensure understanding, adoption and integration of the program into the culture of the organization. Employers must maintain detailed production records of each associate in order to meet the state mandate in the event the employee requests the data for their review.”

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