U.S. West Coast port labor agreement expires, heightening the stakes for negotiations

The union and employers negotiating a new labor deal for more than 22,000 U.S. West Coast port employees said high-stakes negotiations that are being closely monitored by industry and the White House would continue after Friday's agreement expired.

The pact encompasses 29 Pacific Coast ports that handle over 40 percent of U.S. imports, extending from California to Washington. Any work slowdowns or stoppages may wreak havoc on the nation's already ravaged supply networks, raise inflation, and worsen the strain of a faltering economy, which is dragging down the approval ratings of President Joe Biden.

The Pacific Maritime Association (PMA) employer organization and the International Longshore and Warehouse Union (ILWU) announced in a joint statement, "While there will be no contract extension, cargo will continue to move and normal port operations will continue until an agreement can be reached."

"Both sides recognize the strategic importance of the ports to the local, regional, and U.S. economy, and are cognizant of the necessity to negotiate a new coast-wide contract as quickly as possible," PMA and ILWU ahead of Friday's 5 p.m. PDT contract expiration (0000 GMT Saturday).

According to Peter Tirschwell, vice president of maritime, trade, and supply chain at S&P Global (NYSE:SPGI) Market Intelligence, the "no strike" condition ended with the contract.

More than 150 business organizations pleaded with Vice President Biden hours before the deadline to urge for a speedy and smooth conclusion.

The president was urged by groups representing industries ranging from agriculture and fashion to trucking and toys to cooperate with PMA and ILWU to extend the contract, agree to ongoing good-faith negotiations, and avoid actions that might create more disruptions.

Biden has had the labor dispute on his radar for months. On June 10, he took the uncommon step of meeting with the ILWU and PMA in Los Angeles. His labor secretary has weekly meetings with both parties, which began in May.

Tieschwell stated, "We've never had a White House so involved in these conversations as they are today."

After nine months, the latest port worker contract discussion on the West Coast failed in 2015. The eight-day strike by dockworkers impeded commerce flows and drained an estimated $8 billion from the economy of Southern California alone. President Barack Obama sent his labor secretary to negotiate an agreement.

Automating the transportation of containers at the ports, which would result in fewer jobs, looks to be a central concern in the ongoing discussions. Neither side has identified the issue precisely, but the PMA and ILWU have published contradictory research on the effects of automation and exchanged barbs in the media.

PMA and ILWU stated in a joint statement on June 14 that they had no plans for work stoppages or lockouts that would exacerbate existing shipping bottlenecks.

Nonetheless, cautious shippers do not take any chances. They are rerouting goods away from the West Coast in order to minimize potential labor-related delays, especially at the nation's busiest seaport complex in Los Angeles/Long Beach. This increases expenses and contributes to congestion at the ports of New York/New Jersey, Savannah, and Houston.