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West Coast port congestion escalates amid labor disputes, risking new supply chain disruptions

Labor disputes at West Coast ports are causing congestion and increased commercial shipping prices, raising fears of new supply chain disruptions that could result in product shortages or heightened costs. The standoff between port workers and operators is causing worry among legislators, as escalating container prices could impact a wide range of consumer goods, reminiscent of supply chain issues post-pandemic.


According to data from Go Comet, median delay times are on the rise in several key West Coast ports, including Los Angeles, Seattle, and Long Beach, with Seattle wait times now exceeding one week. Experts analysing the data report a rapid surge in shipping container rates on the West Coast.


Eytan Buchman of logistics booking company Freightos says, “Over the past week, container rates for importing 40-foot containers to the United States’ West Coast have leapt 20 percent week-on-week, likely due to anticipated port congestion.”


In Oakland, California, port operations were briefly halted due to a labor strike, but resumed with heavy traffic. While operations across the U.S. and Canada continue as usual, west coast terminals have experienced temporary shutdowns due to labor action.


Negotiations are ongoing behind closed doors between the International Longshore and Warehouse Union (ILWU), representing around 42,000 workers, and the Pacific Maritime Association (PMA), which speaks for 70 shipping companies and terminal operators at 29 West Coast ports. Workers are resorting to stoppages to press management, who in turn accuse them of “disruption tactics.”


Both the White House and Congress are closely monitoring the negotiations, urging both parties to swiftly resolve their differences. Currently, the primary point of contention in the discussions is wages, unlike earlier issues concerning benefits and paid time off.


The Labor Department reports that transportation and warehousing jobs typically pay approximately $29 an hour. The average pay for an ILWU Local 23 longshoreman, according to jobs website Glassdoor, ranges between $22 and $33 an hour, below the national average of $33.34.


However, the ILWU argues that workers risked and sometimes lost their lives during the pandemic, while their wage and benefit percentages compared to PMA's increasing revenues continued to drop from pre-pandemic levels through 2022. They highlight that PMA member company Maersk's gross profits were up over 100 percent, and another member, Evergreen Marine Corp., set aside $62.2 million as a reward for its employees after seeing a 39-percent rise in profits over the previous year.


Increased cost of living and inflation led to a spike in work stoppages in 2022. Experts note that cost of living adjustments, once commonly included in labor contracts, have become less frequent, replaced by other benefits such as profit-sharing.

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