Contract negotiations between West Coast dockworkers and port management are finally over. That doesn't mean congestion that built up during months of slowdowns and shutdowns will be cleared anytime soon, though, and the damage done to the West Coast ports' reputation and the U.S. economy will take far longer to repair.
Disaster. Catastrophe. Fiasco. Pick your word: West Coast ports proved for the second time in just over a decade that they can't provide the predictability and dependability shippers count on. Christmas presents that needed to be under a tree showed up too late to make Santa's sleigh, assembly lines slowed or stopped for lack of parts and agricultural exports rotted on the docks. With a backlog of ships still waiting to be unloaded even now, it's not clear that seasonal spring products will make it to the shelves in time. A tentative contract was reached before a full-scale shutdown occurred - a shutdown that would have cost the U.S. economy an estimated $2 billion, according to a NAM/NRF study. But the scene has nonetheless been reminiscent of 2002, when a 10-day lockout cost the nation an estimated $1 billion a day and left a mess that took months to clean up.
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The long-term result of the 2002 debacle was that East Coast and Gulf Coast ports saw a lasting boost in business as shippers diversified their options. This time the cry is even louder, with a Journal of Commerce survey finding 65 percent of shippers will send at least some of their cargo elsewhere in 2015 and 2016, with a third headed for the East Coast. The numbers are likely to soar even higher next year as expansion of the Panama Canal is completed, making alternative routes easier. It's not just domestic diversification - some of the cargo has already ended up at ports in Canada and Mexico, taking U.S. jobs with it.
Is it too late to save the West Coast ports? Maybe not, but only if labor, management and other parties come together to each do their part. If they don't, the global supply chain and free market forces will simply move on and find less risky options of getting goods to market.
Enough is enough. There are too many challenges facing the ports already to allow uncertainty from unpredictable labor negotiations every few years to become standard operating procedure. What we need is a path to ensure that our ports - and the United States - always remain "open for business."
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There must be an evaluation of how management and labor negotiate future labor contracts covering the nation's ports. The parties must find a way to evolve their negotiations to address today's global supply chains. Retailers, manufacturers and other businesses support collective bargaining when done properly. But the interests of two parties cannot be placed ahead of the millions of workers across the country whose jobs rely on efficient, reliable operation of the ports. If longtime adversaries such as Ford (NYSE: F) and the United Autoworkers can come together to build a stronger enterprise, port management and labor can do the same.