On the eve of the ninth day, they settled their differences and proclaimed, "Let there be freight!"
Just before midnight Dec. 4, ship management and striking clerical workers reached a tentative contract ending an eight-day battle that had shut the Port of Los Angeles, the nation's busiest seaport, and dramatically reduced operations at the adjacent Port of Long Beach, the second-busiest. The six-year contract should be ratified sometime today.
Longshoremen—whose decision to honor the clerical workers' picket lines had shuttered 10 of the port complex's 14 terminals—returned to work this morning, and the supply chain began what is expected to be a multi-week process to clear the backlog of goods.
Stephen E. Schatz Sr., a spokesman for the National Retail Federation (NRF), said in an e-mail that it could take 16 to 24 days to empty the pipeline. That is based on a calculation that it takes two to three days to push freight out the door for each day it sits idle due to a work stoppage.
The time frame for recovery may be lengthened depending on the availability of equipment at the complex, Schatz said. Equipment availability had become a serious issue by the time the strike was settled.
Fortunately for U.S. retailers and consumers, the walkout occurred during a relatively slow time at the ports. Most holiday merchandise has already entered U.S. commerce, and retailers were still several days away from the last replenishment push before Christmas. Still, with inventory levels at record lows, there was concern that a strike lasting into next week would have caused problems for retailers that faced unplanned surges in demand.
Had the strike continued without an agreement or without government intervention, importers would have been forced to rely on expensive air freight to rush holiday goods to market. However, the rush to secure air freight would have tightened capacity so quickly and dramatically that many importers would have been shut out anyway.
The strike's resolution could provide a short-term boost for truckers as shippers and importers may opt for the quickest possible ground transportation mode to rush idled freight to market. For their part, the nation's two main western railroads, BNSF Railway and Union Pacific Corp. (UP), say they are prepared to go with the flow.
"We are ready to resume normal operations," said Aaron Hunt, a UP spokesperson.
"Our rail operations and facilities remain fluid and are well positioned to move containers as the situation is resolved," Krista K. York-Woolley, a BNSF spokeswoman, said yesterday.
DISPUTE OVER OUTSOURCING
Neither side would comment on details of yesterday's agreement. However, the International Longshore and Warehouse Union (ILWU), which represents the clerical unit, said in a statement last night that the unit wins "new protections that will help prevent jobs from being outsourced to Texas, Taiwan, and beyond." It was unclear at press time when the unit's rank-and-file would vote to ratify the agreement.
The unit, which has been working without a contract since June 2010, struck Nov. 27 in protest over alleged plans by the Harbor Employers Association (HEA) to outsource clerical jobs to lower-cost locations in the United States and overseas. The management group has denied the union claim, saying no clerical jobs have been outsourced and none are expected to be.
The unit at the ports is considered the highest-paid clerical workers in the nation. Management said its most recent contract offer, which the unit had rejected, would have paid each member as much as $190,000 a year in wages, pensions, and the monetary value of health benefits.
The needle on settling the dispute began to move on Monday when Los Angeles Mayor Antonio Villaraigosa became directly involved in the talks after cutting short an overseas trip to return to the city. Late yesterday, the Federal Mediation & Conciliation Service (FMCS), an independent government agency tasked with keeping labor-management peace, said it was asked by both sides to arbitrate the dispute.
FMCS Director George H. Cohen and Deputy Director Scot L. Beckenbaugh arrived in Los Angeles late yesterday, but it is unclear what influence they had in bringing about an agreement.
ATTENTION TURNS EAST
With the strike settled, FMCS can return its attention to the East and Gulf Coasts, where it is mediating a long-simmering dispute between the International Longshoremen's Association (ILA) and the U.S. Maritime Association (USMX). Both sides are working under a mutually agreed upon 90-day contract extension. The agreement was reached when it became clear that they wouldn't come to terms before the scheduled Sept. 30 contract expiration date and that a work stoppage during the peak shipping season was becoming a strong possibility.
Management says the ILA has failed to consider any changes to archaic work rules at the 13 ports. USMX is also still concerned about excessive worker pay and benefits that result in millions of dollars being paid for time not worked. For their part, the ILA has accused management of forcing the union to give up an eight-hour work guarantee that has been standard practice for years and wanting to radically change contract language governing the payment of worker overtime.
When the extension was announced Sept. 20, Cohen said the two sides had made progress on "several important subjects" that he declined to specify. There has been no public comment from the FMCS since then. The current extension expires Dec. 29.
Even as he hailed the settlement on the West Coast, Matthew Shay, president and CEO of the NRF, said the group won't rest until tensions are quelled in the East and along the Gulf.
"Retailers, manufacturers, and the rest of the business community cannot afford another shutdown," Shay said in a statement. "Our economy cannot withstand another port disruption."