During the first quarter of 2015, there were major slowdowns at the West Coast ports because the Pacific Maritime Association and the International Longshore and Warehouse Union could not come to a consensus over worker contracts. It took clear until May for an agreement to be drawn up that both parties agreed to sign. There is still some congestion and backlog, but overall things are running at a faster and smoother pace.
Vice President for Supply Chain and Customs Policy for the National Retail Federation, Jonathan Gold, said, “Despite some lingering labor issues, the volume of cargo and the rate of growth have both largely settled down. There are still congestion issues to be dealt with, but we’re hoping to see reasonably normal back-to-school and holiday seasons this year now that the tensions of contract negotiations are behind us.”
The new labor contract will be in effect for five years. The government is hoping that the same delays and labor disputes will not occur again at that time. Many people are criticizing the government for not stepping in to help settle the disputes because the delays at the ports had a negative effect on the economy that could have been prevented. They contributed to the U.S. gross domestic product shrinking rate of 0.7 percent annually.
Many companies decided to take their business to other ports, and they don’t plan to return. That could have long-term effects on the U.S. economy because many products are now being shipped through Mexico and then transported to the U.S. by truck. The U.S. and the West Coast ports would both benefit from shorter contract negotiations. Hopefully both parties will learn, but the same thing happened 10 years ago and 15 years ago when new labor contracts were needed, so it’s unlikely that they will learn from their mistakes.