The US economy could lose $2bn a day in economic activity during a work stoppage at west coast ports, retailers have warned as an impasse in contract negotiations threatens a lockout by employers within days.
Jonathan Gold, head of supply chain for the National Retail Federation, based the warning on a study the federation commissioned last year examining how a complete stoppage would affect US gross domestic product. The study found a five-day lockout would reduce GDP by $1.9bn daily, a 10-day lockout by $2.1bn a day and 20 days $2.5bn daily.
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Mr Gold was speaking after the Pacific Maritime Association, representing employers, presented what it called its “all-in” offer to the International Longshore and Warehouse Union after nine months of contract talks. The PMA made it clear that the disruption from go-slows by the union was growing so severe it would impose a lockout on workers within five to 10 days if the offer was not accepted. The last lockout at the ports in California, Oregon and Washington lasted 10 days and disrupted supply chains for six months afterwards.
The NRF has said its members have already been starved of supplies or forced to switch to expensive alternatives such as airfreight over recent months as worsening labour relations at west coast ports has slowed operations. The congestion at the neighbouring ports of Los Angeles and Long Beach — which alone handle 40 per cent of US container traffic — was so severe on Thursday that 18 container ships were waiting offshore to load and unload. There would normally be only one or two, according to the Port of Long Beach.
Retailers hoped that the final deal would be accepted and the ports would return to normal, Mr Gold said. He warned, however, of the likely impact if a full shutdown ensued.
Closing the ports at this point would be reckless and irresponsible
- Robert McEllrath, president of the International Longshore and Warehouse Union
“It’s at a crisis level and we hope this gets resolved,” he said.
The employers’ offer includes pay terms that over five years would increase port average annual salaries from $147,000 to $162,000, maintain their current, unusually generous healthcare plans and provide annual pensions of up to $88,800.
Robert McEllrath, president of the ILWU, responded to the employers’ statement by warning them against shutting down the ports at a point when many of the critical issues in talks over a new contract have been resolved. The two sides have been in talks since before the previous, six-year contract expired on July 1.
“Closing the ports at this point would be reckless and irresponsible,” Mr McEllrath said.
Any wholesale closure of the ports could prompt the US federal government to intervene, Neil Davidson, a ports analyst for London-based Drewry Shipping Consultants, said. The 2002 lockout ended after George W Bush, then president, used the draconian Taft-Hartley labour relations legislation to force a resumption of work.
The employers — who have sounded increasingly frustrated — and union had painted very different pictures of the depth of the outstanding problems, Mr Davidson pointed out.
“They don’t really agree how far apart they are,” he said.
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