Biden Faces Yet Another Supply Chain Problem
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President Joe Biden was able to avoid a supply chain crisis last week, but the situation facing California dockworkers could put him up against another possible problem.
Last week, the twin ports of Los Angeles and Long Beach—the nation’s two largest—shut down nearly all operations from Thursday night to Friday evening as the result of a widespread worker shortage that’s been reportedly linked to contract talks that have been ongoing since July.
Although the West Coast ports reopened after the 24-hour work stoppage, more than 20,000 dockworkers continue to work without a contract, as they have since last summer.
“The significance of the combined [Los Angeles-Long Beach] terminals on the flow of global commerce cannot be understated,” Mark Baxa, the president and CEO of the Council of Supply Chain Management Professionals, told Newsweek.
The San Pedro Bay Port Complex, the site of the two ports, accounts for 29 percent of the U.S. market share and 75 percent of the West Coast, according to the Port of Los Angeles 2022 data. Last year, the Los Angeles port moved nearly 10 million cargo containers, valued at $311 billion and the Long Beach port moved more than 9 million container units, valued at $200 billion.
So, halting trade through the complex could threaten more than $500 billion of goods and some 40 percent of foreign goods arriving in the United States.
“Doing the right things right as of now means keeping the U.S. domestic supply chain healthy while contract negotiations continue,” Baxa said.
Last week, the Pacific Maritime Association (PMA), which represents shipping employers on the West Coast, said the International Longshoremen’s and Warehousemen’s Union (ILWU) Local 13 effectively shut down “the largest gateway for maritime trade in the United States” by withholding labor. Shippers viewed the recent work stoppage as a move from the union, which has been engaged in contract negotiations for nine months, to put pressure on those talks.
ILWU, on the other hand, did not mention any formal work action, instead pointing to the union’s monthly membership meeting, which took place on Thursday and the Good Friday holiday for the worker shortage.
“COVID, supply chain disruptions and high inflation have made bargaining new contracts complicated and expensive,” Arthur Wheaton, the director of labor studies at Cornell University, told Newsweek.
Wheaton and Baxa said that in an effort to avoid coming upon work stoppages, shippers have diversified their port selections and begun shipping to other harbors, but Michael Farlekas, the CEO of connected supply chain management platform e2open, told Newsweek that given how long ocean shipments take, “diverting to a different port of discharge is only an option when facing full port shutdowns or severe weather conditions.”
Baxa added that shipping to alternative ports will raise logistical costs that will result in “increased pricing pressure to consumers,” so it’s important for the two sides to find a solution to the months-long supply chain problem at hand.
Biden is not new to supply chain issues caused by union actions. In November, the nation’s largest railroad union, Sheet Metal, Air, Rail and Transportation Workers transportation division (SMART-TD), threatened to strike ahead of the holiday season as they pushed for better pay, scheduling, safety standards and medical leave.
After weeks of aiding the negotiations, the president called on Congress to intervene in the stalemate, eventually signing legislation that imposed a labor agreement between rail companies and workers, averting a strike.
“Our nation’s rail system is literally the backbone of our supply chain,” Biden said in December. “A rail shutdown would have devastated our economy. Without freight rail, many of our industries would have literally shut down.”
Now, Biden is being asked to help out supply chains again by helping assist the talks at California’s ports. Baxa said his council and other industry associations have requested that the administration “remain intimately involved as talks continue.”
“He may now need to be prepared to act as he did with the U.S. Railroad contract negotiations should the threat of a work stoppage continue,” Baxa said.
Although negotiations can oftentimes be messy, some experts are hopeful that the talks in Los Angeles and Long Beach could reach a solution without intervention from Biden.
“I am actually somewhat encouraged because the two sides are not arguing/negotiating in the press,” Wheaton said. “There are shared interests of workers and port management to resolve quickly to keep existing customers and not drive away customers. Hopefully, things will work out soon.”
In the meantime, supply chains can refer to the lengthy delays during the recurring waves of COVID-related work restrictions to figure out how to keep trade flowing, Farlekas said.
“Because of past closures and influxes of port congestion, we already know what to expect and how to adapt,” he said.
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