By Steve Gorman
LOS ANGELES, Feb 21 (Reuters) – A group of shipping companies and a
powerful dockworkers union reached a tentative labor deal late on Friday
after nine months of negotiations, settling a dispute that disrupted
the flow of cargo through 29 U.S. West Coast ports and snarled
trans-Pacific maritime trade with Asia.
The agreement, confirmed in a joint statement by the two sides, was
reached three days after U.S. Labor Secretary Thomas Perez arrived in
San Francisco to broker a deal with the help of a federal mediator who
had joined the talks six weeks earlier.
The White House called the deal “a huge relief” for the economy,
businesses and workers. President Barack Obama urged “the parties to
work together to clear out the backlogs and congestion in the West Coast
ports as they finalize their agreement,” the White House said in a
statement.
The 20,000 dockworkers covered by the tentative five-year labor accord have been without a contract since July.
The dispute had reverberated throughout the U.S. economy, extending
to agriculture, manufacturing, retail and transportation. Supply chain
disruptions have hit from automakers to consumers of french-fried
potatoes at McDonald’s Corp restaurants in Japan.
Wal-Mart Stores Inc, the world’s largest retailer, said on Thursday
the dispute had caused delays of “pockets of merchandise” and that the
potential cost had been included in the company’s earnings forecasts
this week.
The deal was welcomed by groups such as the National Association of Manufacturers and the U.S. Meat Export Federation.
U.S. meat exporters have had to put millions of pounds of beef and
pork into cold storage, ship by air or use Canadian or Mexican ports,
rather than send it out through West Coast ports. Tyson Foods Inc and
Cargill Inc are among the leading U.S. pork and beef producers.
Tensions arising from the talks have played out since last fall in
chronic cargo backups that have increasingly slowed freight traffic at
the ports. According to the American Association of Port Authorities,
some $3.8 billion worth of goods move in and out of U.S. seaports each
day.
The West Coast ports handle nearly half of all U.S. maritime trade and more than 70 percent of the country’s Asian imports.
Shipping companies have sharply curtailed operations at the marine
terminals, suspending loading and unloading of cargo vessels for night
shifts, holidays and weekends at the five busiest ports.
Perez said that as part of Friday’s accord, the International
Longshore and Warehouse Union and the shippers’ bargaining agent, the
Pacific Maritime Association, agreed to fully restore all port
operations starting Saturday evening.
The deal is subject to ratification by the union rank-and-file and
the individual shipping lines and terminal operators that make up the
PMA. No details of the terms were immediately revealed.
Perez was sent to California on Tuesday as an emissary for Obama, who
had come under mounting political pressure to intervene in a labor
conflict that by some estimates could have ended up costing the U.S.
economy billions of dollars.
‘TOO MANY…ARE SUFFERING’
Perez said he told the union and management negotiators: “You have an
obligation to resolve this matter quickly because too many people and
businesses are suffering.”
The principal sticking point when he first joined the talks, Perez
told reporters after the agreement, was the arbitration system for
resolving workplace disputes under the contract. He did not disclose how
that impasse was overcome but said the parties agreed to changes that
would improve the system while “ensuring fairness to both sides.
Perez, who had been joined at times during the week by U.S. Commerce
Secretary Penny Pritzker and Los Angeles Mayor Eric Garcetti, exited the
talks Friday morning after one last meeting with both sides.
Announcement of an agreement came hours later.
Disruptions at the ports have been blamed by each side on the other
as pressure tactics. Cargo loads have faced lag times of two weeks or
more as dozens of inbound freighters stacked up at anchor along the
coast, waiting for berths to open.
California farmers were especially hard hit, with port disruptions
threatening perishable goods headed to overseas markets and export
losses estimated to be running at hundreds of millions of dollars a
week.
Japan’s Honda Motor Co said earlier this week it would slow
production at some of its North American plants due to delays in parts
shipments from Asia while Toyota Motor Corp said it had reduced overtime
at some factories.
Nissan Motor Co Ltd said it had been somewhat affected. Honda and
other car manufacturers said they were switching to higher-cost air
freight to minimize delivery slowdowns.
Singapore-listed Neptune Orient Lines’ container shipping unit partly
blamed the congestion for an 8 percent decline in its fourth quarter.
Port officials have said it would take six to eight weeks to clear
the immediate backlog of cargo containers piled up on the docks and
several months for freight traffic to return to a normal rhythm once the
dispute was settled.
Besides work slowdowns the companies accused the union of staging to
gain bargaining leverage and the curtailed operations the union said
were designed to squeeze its members, the West Coast waterfront still
faces a range of systemic problems cited by port authorities as factors
in the backups.
Still, the settlement averted a worst-case scenario of the labor
dispute devolving into a full-scale, extended shutdown of the ports,
which the retail and manufacturing industries have projected could cost
the U.S. economy some $2 billion a day. (Additional reporting by Ann
Saphir and Sarah McBride in San Francisco and Dan Whitcomb in Los
Angeles; Editing by Lisa Shumaker, Ken Wills, Bill Trott and Frances
Kerry)
© 2015 Thomson Reuters. All rights reserved.