Industry News

The Next Supply Chain Risk: Fed Up Workers

 

Increased shipping volumes, extreme weather, COVID-19, geo-political issues—the list goes on with regard to the now popular threats the global supply chain faces. With that said, there is a far less talked about and far larger threat facing the supply chain and that is the labor force.

Today, we’re going to focus on longshoremen and their role in the supply chain. A longshoreman, also known as a stevedore, dockers, or dock worker, is an individual who loads and unloads cargo onto ships at a dock or port. These individuals are absolutely essential in allowing exports to flow out and imports to flow into the country. Guess what, they’re fed up.

A workforce of nearly 22,000 dockworkers on the West Coast may soon strike. At the end of June, the contract for the International Longshore and Warehouse Union expires. Should contract negotiations go south, this doesn’t just impact the dockworkers, this impacts non-union laborers who rely on ports and threatens the flow of the supply chain as a whole.

Longshoremen are some of the highest-paid blue-collar workers in the United States. “Class A” longshoremen earn nearly $100,000 per year along with guaranteed hours with a pension. In a recent article written by the New York Times, longshoremen believe this is fair compensation. Citing the dangers of the job, one dockworker described how he has seen colleagues crushed by containers. “You don’t get hurt down here, you get killed.” Additionally, many describe how when everything else shut down, they were there to serve the American people and kept commerce moving.

On the other side of the coin, many laborers who interact with the longshoremen have had a less than productive experience. Truckers, who rely on getting cargo from the ports, have complained that longshoremen only add to the chaos at the ports. According to the Times:

Some port workers accuse the longshoremen of adding to the chaos at the ports in the lead-up to their contract negotiations, boosting their leverage with the terminal operators while stymieing the flow of cargo for everyone else.

“Every time there’s a contract up, things slow down,” said Anthony Chilton, 55, who drives a truck hauling containers between the ports and warehouses of Southern California. “We always blame the longshoremen. They slack off, take breaks, call in sick.”

Large businesses aren’t taking any chances this time around. Many are ordering extra goods as a hedge and have been stockpiling containers at nearby yards not controlled by the longshoremen. Additionally, large container companies are ready to divert vessels to the east coast should contract negotiations go south.

So, what could make contract negotiations implode? A large point of contention is the automation of ports, which many argue is absolutely necessary to keep up with record volumes of cargo. Record profits and higher rates are other touchy subjects where many dockworkers question whether or not the ports want to ‘sincerely’ improve their infrastructure.

Regardless of opinion, we can conclude that longshoremen are absolutely necessary and any sort of labor impasse could exacerbate the current supply chain crisis. For reference, in 2014, the last time the union’s contract expired, there was a noticeable slowdown at west coast ports. Whether or not smooth contract negotiations will occur is yet to be seen as the ILWU stated they will not come to the table until May of this year.

M.E. Dey will monitor this situation and keep you posted on developments as they come in.

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