California Supply Chain Crisis Could Be Rooted in Union Labor Dispute

By Neil Campbell | October 27, 2021
Neil lives in Canada and writes about society and politics.
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California supply chain crisis PMA and ILWU labor dispute
Trucks wait in line in front of containers at the Port of Los Angeles, in San Pedro, California, October 13, 2021. Interviews with workers on the ground say truckers are ready, able, and willing to work, but cannot. The root may be in a labor dispute between a longshoreman’s union and a maritime business owners’ association. (Image: ROBYN BECK/AFP via Getty Images)

A major supply chain crisis that has left the California coast line littered with dozens of cargo ships as supply shortages plague North America may be rooted in a labor dispute over issues such as automation and the staggering cost of upgrading port equipment to comply with carbon neutral policies. 

Yahoo News interviewed multiple workers who sit at the heart of the California shipping crisis on Oct. 26. They told the outlet that there were many truckers available who were ready, able, and willing to work, but could not. 

One 25-year veteran of the trade, Carlos Ramirez, said the concept of a driver shortage was “the biggest excuse” and “not true.” He also told the outlet that the advertised shift at California ports to 24/7 operations is not congruent with reality, “I don’t know anybody that is working 24/7…If there was work, we [would] be working 24/7.”

“It’s been the worst month I ever had,” said Ramirez, who as an independent driver gets paid per load, not per hour. “There’s no work. They’re not releasing anything from [the port]…That’s what pays my bills.”

The professional also said drivers would often wait three hours or longer just to get inside the port, and was paraphrased as saying truckers were “at the mercy of longshoremen who operate on their own schedule.”

Yahoo interviewed one longshoreman at the San Pedro Bay Port Complex, only identified as Alfred, who said the Pacific Maritime Association (PMA), a group that negotiates on behalf of maritime businesses with the International Longshoreman and Warehouse Union (ILWU), was “cutting the work.”

“They’re the ones who are not training skilled positions. [That] means crane operators, top handler drivers, trans drivers. They’re the ones who are keeping the ships out there at sea anchored,” said Alfred.

“We have the manpower there, [they] just keep cutting the work,” he said, adding, “There are truck drivers that come in and are waiting for a chassis and the company does not allow us to give them it.”

“If we don’t have the space and we need to get some of this cargo out, why are we holding chassis, and not giving them to the drivers so they could pick up their load to make more space for us?”

Alfred continued, “The drivers are there, literally for hours and hours, and sometimes [they] don’t even pick up a load.”

Carbon neutrality and a $4 billion invoice

NFI Industries, a logistics company headquartered in New Jersey, noted in a July article that the PMA and ILWU have a contact renegotiation pending in the middle of 2022 that “could be the most contentious to date.”

The company noted there was an analogous problem during 2014-2015 negotiations, “The 2014-15 contract negotiations resulted in crippling ILWU work slowdowns and a PMA response that included cessation of lucrative night and weekend work for longshoremen. West Coast ports went into gridlock for almost four months.”

“Exporters, especially agricultural exporters who must ship their perishable cargo through the closest port, were hurting from the loss of business, some of which was lost indefinitely.”

They continued, “The pain of the previous year was so severe, and costly, that terminal operators that were on the fence about automation were now deciding to move forward with the costly introduction of automated machines that require little if any human intervention.”

NFI says three terminals have installed automation since 2008 and that the ILWU “has increasingly come to see automation as an existential threat and a microcosm of the larger threat of robotics displacing human labor.”

It notes, “The primary reason is that cargo handling costs on the West Coast are going up owing to regulation, and as the port range continues to lose market share to Canada and the US East and Gulf coasts. Automation, although expensive to implement, is an option terminals need in order to address rising costs.”

“On top of that, there is the estimated $4 billion marine terminal operators will have to spend to install zero carbon cargo handling equipment at LA–Long Beach terminals in compliance with the 2030 Clean Air Action Plan.”

“Pointing to the $800 million already paid to dockworkers in 2018 in return for the right to automation, some employers see a retreat as throwing money out the window.”

‘Not in my backyard’

In an Oct. 22 Twitter thread, CEO of Flexport, a freight forwarding and data analytics company, Ryan Petersen, recounted his experience of commandeering a ship normally chartered to conduct sea-based memorial services for a three hour trip through the Long Beach port complex to see the situation for himself and a client.

“The ports of LA/Long Beach are at a standstill. In a full 3 hour loop through the port complex, passing every single terminal, we saw less than a dozen containers get unloaded,” said Petersen in one tweet.

“There are hundreds of cranes. I counted only ~7 that were even operating and those that were seemed to be going pretty slow,” he said in another.

The nuances of the backlog go deeper, “It seems that everyone now agrees that the bottleneck is yard space at the container terminals. The terminals are simply overflowing with containers, which means they no longer have space to take in new containers either from ships or land. It’s a true traffic jam.”

“Right now if you have a chassis with no empty container on it, you can go pick up containers at any port terminal. However, if you have an empty container on that chassis, they’re not allowing you to return it except on highly restricted basis,” said Petersen.

Washington Post reported on Oct. 26 that the cause of the problem Petersen described was “NIMBYism.”

“It turned out that the main problem wasn’t an absolute space constraint but a local zoning regulation. Long Beach prohibits companies from stacking off-loaded containers more than two high. The law is not a safety regulation but an aesthetic one. City officials decided that stacks of containers more than eight feet high were too ugly to tolerate.”

The Post continued, “The situation exemplifies why the formerly can-do state of California has become such a difficult place to build anything, including an upwardly mobile life. In the name of protecting local vistas, a seemingly minor rule got enacted that exacted enormous aggregate costs far beyond the immediate area.” 

“The voters in Long Beach gained a modest improvement in the view while the entire national — indeed global — economy suffered from less efficient shipping. (The Port of Los Angeles is two nautical miles from the Port of Long Beach, and the two account for about 40% of U.S. container traffic.)”

The outlet said the City Manager relaxed the stacking restriction to four or five containers high for the next 90 days.