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Wages may rise by 32%! US-West Port Labor Negotiates to Sign Six-Year New Agreement, but Canadian Port Strikes Again "Shipping Logistics | International Logistics | International Freight Forwarder | Guangzhou Freight Forwarder | Panyu Freight Forwarder | Hongde International
Jun 20,2023
Recently, after a year of contract negotiations, resulting in multiple delays and a decline in cargo traffic at ports along the West Coast of the United States, the terminal union labor and management finally reached a preliminary agreement for six years.
However, it is worth noting that a wave of just flat, wave after wave, Canada's west coast ports may strike as early as June 24.
In the early hours of June 15, on the afternoon of June 14, local time in the US and West, the Pacific Maritime Association (PMA) and the International Coastal and Warehouse Union (ILWU) announced a preliminary agreement for a new six-year contract.
The contract, which covers 22000 workers at 29 West Coast ports from San Diego to Seattle, ends more than 10 months of bitter labor battles.
The new port contract will raise wages by 32 per cent and bring a $70 million bonus for dockers.
The Pacific Maritime Association (PMA) said on Twitter that the agreement was reached with the assistance of U.S. Acting Secretary of Labor Julie Su, adding that the agreement is subject to approval by both parties and will not release details of the agreement at this time.
"We are pleased to have reached an agreement that recognizes the heroic efforts and personal sacrifices of ILWU employees in keeping the port operational," said PMA President James McKenna and ILWU President Willie Adams in a joint statement. "We are also happy to turn our full attention back to the operation of the West Coast ports."
Acting Labor Secretary Julie Su issued the following statement after the Pacific Maritime Association and the International Union of Terminals and Warehouses reached a preliminary agreement, according to the official news released by the U.S. Department of Labor:
"Thanks to the hard work and perseverance of the leadership of ILWU and the PMA, the interim agreement provides important stability to workers, employers, and our nation's supply chains. This important milestone is welcome news for all, and we are pleased to congratulate both parties on their achievements on behalf of President Biden."
According to Reuters, West Coast port dockworkers have been working without a contract since July 1, 2022. Protracted negotiations between the ILWU and the PMA have focused mainly on differences over wages and the expansion of the role of automation.
Unions want a bigger share of the record profits from the surge in freight during the pandemic.
A series of industrial actions by ILWU at several West Coast ports during the year-long contract negotiations led to a slowdown and even shutdown of port operations.
Recent data from MarineTraffic showed a "significant increase" in the average number of containers waiting outside the US West Coast port border ".
According to MarineTraffic data, last week,Port of OaklandThe average number of containers waiting outside port boundaries rose from 25266 to 35153 in TEU terms.
A MarineTraffic spokesman said thatPort of Los Angeles and Port of Long Beach, CaliforniaThe average number of TEUs waiting outside Hong Kong rose from 21297 in the previous week to 51228 last week.
If calculated based on the average value of each container of $61000 and customs data, the total value of the 86381 containers floating and waiting outside the ports of Oakland, Los Angeles and Long Beach is $5.2 billion.
With the retail shipping season starting in July, the industry is paying closer attention to possible operational disruptions, and many have already shifted some freight traffic to the East and Gulf Coast.
The U.S. retailers and importers who moved the goods said they would not return the goods to West Coast ports until the agreement was approved, which could take weeks.
Supply chain visibility platform FourKites said that only 27% of the imports it tracked in June passed through West Coast ports, compared to 73% on the East Coast.
By comparison, 40 percent of imports passed through West Coast ports as of February, and a whopping 46 percent as of September 2021, the FourKites said.
Despite growing signs of congestion at U.S. West Coast ports, particularly those that reported between five days (Los Angeles and Long Beach) and nine days (Seattle), the Drewry World Container Index saw its biggest weekly drop in six months, 5.3 percent, to close at $1592, its lowest level in 36 months.
Trans-Pacific freight rates pulled back this week, leading the downward trend.
Freight rates between China-Europe and China-United States declined significantly, with the Shanghai-Rotterdam freight rate of $1349 million, the lowest since October 2019. Both the East and West U.S. routes were down 8 percent.
Both routes reported their worst data since mid-June 2020, the worst in three years. Trans-Atlantic trade between Europe and the United States witnessed another 5% cooling, while all return trade witnessed a downturn in prices.
With overall freight rate increases by shipping lines considered ineffective and inventory levels in the United States also declining, although Drurri commented that freight rates on trade routes beyond the transatlantic are expected to rise, in terms of freight rates, the second quarter of 2023 is coming to an end and remains uncertain in the short term.
More than 7000 workers represented by ILWU Canada voted overwhelmingly in favor of the strike, which will affect Canada's west coast ports, including its two largest gateways, the Port of Vancouver and Prince Rupert.
According to CNBC, if there is a strike, the earliest strike date will be June 24.
The most affected port is undoubtedly the Port of Vancouver. About 90% of Canadian trade passes through the Port of Vancouver, and about 15% of U.S. imports and exports are transported through the Port of Vancouver each year.
It is estimated that Canada's West Coast ports handle nearly $225 billion worth of cargo annually, and rail shipments include many consumer goods, from clothing to electronics and household goods.
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