“The negotiations for this contract were some of the longest and most difficult in our recent history,” said ILWU International President Robert McEllrath. “Membership unity and hard work by the Negotiating Committee made this fair outcome possible.”

The release continued:

The new agreement provides approximately 20,000 good-paying jobs in 29 West Coast port communities. The contract will maintain excellent health benefits, improve wages, pensions and job safety protections; limit outsourcing of jobs and provide an improved system for resolving job disputes.

Jonathan Gold, vice president for supply chain and customs policy of the National Retail Association, issued a statement saying shippers and retailers can now “rest a bit easier” with improved stability in West Coast ports over the next few years. However, he also noted that it will not be “long before we go through this process all over again.”

“The past year was fraught with disruptions, slowdowns and partial shutdowns. This is something we will no longer tolerate. The world is changing, and our ports must adapt to ensure they provide shippers with the predictability and stability they need. We can no longer accept last-minute negotiations and months and months of talks while slowdowns and stoppages disrupt the global supply chain and international trade.

 

“Negotiators need to begin their talks early enough to have an agreement in place well before another contract expires without active or passive threats to the economy and the millions of jobs dependent on our nation’s ports and supply chain. The current process is impractical and unsustainable and fails to meet even the most basic requirements of a modern, global supply chain.

 

“A new process is needed for labor and management on both coasts. Stakeholders cannot afford to go through this process every couple of years. We need a new system in place that benefits all parties and provides for the efficient transportation of the nation’s cargo and commerce.”

The agreement comes on the heels of a longtime dispute that caused severe congestion for several months in the ports of Los Angeles, Long Beach, Oakland and other major gateways.

The labor contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expired in June, but the union saw trouble coming.  And one of the first moves for labor was to rally the lobbyists.

After spending the last couple of years lobbying against taxes on Obamacare health care benefits and a proposal to expand U.S. exports, the union turned its efforts to coast contract negotiations in the second quarter of 2014, according to federal records.

Few people were aware that a protracted battle was imminent that would stack up ships in the harbor and hamstring major companies including Wal-Mart and Honda.

The contract lobbying accounted for part of the $230,000 the union spent on lobbying in Washington in 2014, records show.  

Overall, the ILWU has spent $3.85 million on lobbying since 1999, employing both its own in-house lobbyist and sometimes using an outside firm for extra help.

Until it quit in 2013, the ILWU was part of the AFL-CIO. In 2014, other longshoremen’s unions still affiliated with the AFL-CIO were helped by it spending an additional $380,000 on their behalf. The AFL-CIO also lobbied elected officials on a broader spectrum of issues that benefited the West Coast laborers, although not directly.

The ILWU long relied on the larger union’s PAC, the International Longshoremen’s Association AFL-CIO Committee on Political Education, with a $10 million balance, to carry its donations. As such, it has spent a paltry $15,600 of its own money on donations since 1990, with 92 percent going to Democrats, according to OpenSecrets.org.

Pacific Martime Association

ILWU’s lobbying influence and spending far outstrips its foe, the Pacific Martime Association. PMA’s membership is composed of carriers and terminal operators, who use the group to negotiate labor agreements with the ILWU.

PMA hasn’t spent a penny on disclosable lobbying since 2008, when it shelled out $110,000 to lobby a failed bill regarding an adjustment of pension plans.

Between 1999 and 2008, the PMA spent $530,000 on lobbying, making it a small player in Washington politics.

Rather than lobbying, the PMA has focused its spending on $141,000 in campaign donations to individuals and PACs since 1990, over 90 percent of it on Democrats, according to OpenSecrets.org.

Change of arena

During the recent dispute, U.S. Labor Secretary Thomas Perez threatened both sides with a change of arena: The parties would have to head to Washington for further debate.

That trip was circumvented by an 11th-hour agreement that still needs to be ratified by both sides. The membership could vote on the changes as soon as April, although nothing has been set. The accord for now allows a backlog of ships to begin unloading and circumvents a work stoppage.

The ILWU, though, faces a tough future. Not only are unions facing diminishing support nationwide, but the ports in Los Angeles and Long Beach, which today unload 70 percent of cargo on the West Coast, most coming from Asia, face competition from the expansion of the Panama Canal.

The project is expected to be completed in early 2016. It will allow the canal to pass through larger ships with what is in many cases a more direct – and possibly cheaper – route to the East Coast for Asian cargo.

The volatility of labor relations on the West Coast has always made shippers queasy. But the high volume of the ports in Los Angeles and Long Beach gives them the ability to keep costs lower than their competition in the Gulf ports.

“In the short term, they have so much clout at Long Beach and L.A. they can lower rates in short term to get business,” said Anthony Ross, a researcher at the University of Wisconsin-Milwaukee’s Lubar School of Business. He is the author of a report that examines the impact of the Panama Canal’s expansion.

He projects the work climate on the West Coast, combined with increased manufacturing in South America, means that “if someone wants to do business in the U.S., they will want to use the Panama Canal. And they will be drawing trade from Asia. And if they are exporting to Asia, they will also use the Panama Canal.”

Ross said union leadership for the U.S. ports on the West Coast has been “playing a game for so many years without thinking how to be efficient, but rather how to be the fat hog in the race. And thinking they can do whatever they want to do is shortsighted.”

Shipment diversions

Even during the recent snafu, importers diverted some of their shipments to East Coast ports.

Pundits are already wondering about the extent of the damage the most recent trouble may have caused.  An opinion piece in the Journal of Commerce on Sunday noted:

“What we will now see is a significant reaction from importer and exporter companies. Not all cargo can avoid the West Coast — not by a long shot — but unlike 2002 when many C-Suites were blindsided by the 10-day lockout, this time there is complete understanding of the risks and a full realization that, though it may be five years in the future, they will be going through this all over again unless long-term changes in their supply chains are made starting now.”

The ILWU represents 59,000 workers, including 20,000 employees at 29 ports running up the West Coast, from San Diego to Bellingham, Washington. Its territory includes the two busiest ports in the United States, Los Angeles and Long Beach.

The PMA says laborers make an average of $147,000 a year. The ILWU  contends that limited hours make that figure around $83,000.

Yet any shipping lost in recent days might never come back.

Houston, in particular, has been building its port into a mega-facility. As Joel Kotkin wrote recently:

The Port of Houston, connected with the Gulf of Mexico by the 50-mile Houston Ship Channel, is now the nation’s Number One export hub, feeding off the energy revolution and expanding economic exchange with Latin America. Mexico and Brazil are by far the port’s largest trading partners. Houston’s port business has grown almost fourfold since 2000 — far faster than either New York’s or Los Angeles’s. Port officials estimate that the trade sector contributes $500 billion in economic activity and more than 1 million jobs to the state of Texas annually.

This is one reason why Houston and the rest of Texas are weathering the current downturn in oil and gas prices better than they did a similar downturn in the late 1980s.

Back out here on the West Coast, the Los Angeles Times reported it may take a while to return to normalcy:

West Coast ports are emerging from the most contentious labor dispute in more than a decade, but lingering resentment and structural problems may complicate a return to normality.

Activity picked up Saturday at Western harbors after the dockworkers union and employers reached a tentative agreement late Friday on a new five-year contract that will cover 20,000 workers at 29 ports.

Although there are obvious differences, this is somewhat like how a 2011 grocery worker strike was avoided in Southern California. That was unlike in 2003, when a four-month strike cost grocery companies $2 billion in profits and shook up the entire industry, including mergers, multiple store closings and greater use of automated tellers.

Despite its problems, the U.S. economy in most ways remains diverse and competitive.