US west coast ports deal eases strike fears after White House intervention

Longshoremen and a group representing US west coast port employers have reached a tentative contract agreement, averting a potential strike that businesses feared could cost the US economy $1bn a day.

The deal comes after 13 months of contentious negotiations. US president Joe Biden this week sent his acting labour secretary, Julie Su, to push for an agreement following sporadic work stoppages that had slowed cargo movement at ports from Seattle to Los Angeles.

The tentative, six-year contract agreement reached on Wednesday covers 22,000 workers and 29 west coast ports.

In a statement, Su said the preliminary deal “delivers important stability for workers, for employers and for our country’s supply chain”.

The deal marks the Biden administration’s second intervention to keep cargo flowing at ports on the US west coast. In late 2021, the president was forced to address bottlenecks at the twin ports of Los Angeles and Long Beach that were a main contributor to US supply chain disruptions.

Biden, who campaigned on his pro-labour stance and is running for re-election in 2024, stepped in to avert a standstill at the ports that could have set back progress in reducing inflation.

The negotiations had been marked by increasingly heated exchanges. On Monday, the Pacific Maritime Association, which represents shippers and terminals, accused the International Longshore and Warehouse Union, which represents dock workers, of having staged “disruptive actions” that diverged from its public statements.

The ILWU, in turn, accused the port operators of manipulating media coverage of the disruptions to influence the negotiations.

Gene Seroka, executive director of the Port of Los Angeles, said the tentative agreement “brings the stability and confidence that customers have been seeking”.

In a joint statement, Pacific Maritime Association president James McKenna and ILWU chief Willie Adams praised the deal, adding: “We are also pleased to turn our full attention back to the operation of the West Coast Ports.”

Importers had been braced for shortages and higher prices as the dispute escalated, with agricultural exporters expected to be among the first to be hit.

Delays had also forced beef shippers to freeze raw products that were supposed to be delivered chilled, reducing their profits by as much as 80 per cent and damaging relationships with Asian buyers, said Peter Friedmann, executive director of the Agriculture Transportation Coalition, a trade group that represents shippers.

The labour dispute had threatened to disrupt the busy shipping period as retailers prepared to stock up for the holiday season. Many were already at historically low inventory levels after rising interest rates led some to slim down their safety stock, noted Brian Pacula, a supply chain expert at consultancy West Monroe.

The Port of Los Angeles, the busiest in the US, has handled 27 per cent fewer containers this year than in the first five months of 2022.

The negotiations, however, took place against a backdrop of falling pressure on US supply chains compared with the strains during the coronavirus pandemic.

The average price for shipping a container from Asia to the US west coast jumped 19 per cent to $1,569 last week as port obstructions mounted, but this remained 85 per cent lower than a year earlier, according to Freightos, a freight data provider.