This week the International Longshore and Warehouse Union and the Pacific Maritime Association started negotiations on a new contract that would affect dockworkers up and down the West Coast. As the supply chain already faces major disruptions, some — including farmers in the Pacific Northwest — are concerned about a labor impasse that could create further challenges. We hear more from Peter S. Goodman, a global economic correspondent for The New York Times and author of “Davos Man: How the Billionaires Devoured the World.”
The following transcript was created by a comuter and edited by a volunteer:
Dave Miller: This is Think Out Loud on OPB, I’m Dave Miller. The negotiations have begun. Yesterday, the International Longshore and Warehouse Union started bargaining with the Pacific Maritime Association on a new contract. The current contract expires at the end of June. Trade at 29 West Coast ports is at stake. That includes mega ports like those in Long Beach and LA, in addition to smaller ones in Portland, Longview and other Northwest cities. These negotiations come at a time when global supply chains are still reeling from the shocks of the pandemic and the war in Ukraine. Peter Goodman has written about this for the New York Times. He’s the author of the book, Davos Man: How the Billionaires Devoured the World, and he joins us now. Peter Goodman, welcome.
Peter Goodman: Thanks for having me.
Miller: Thanks for joining us. Just to start. How significant are these west coast ports in terms of the US trade or even global trade?
Goodman: Extraordinarily significant. These ports, I mean take just LA and Long Beach – this is the gateway for something like 40% of all the inbound container traffic. This is stuff coming in from across the Pacific, much of it from factories in China. This is the way it gets to the United States, to consumers. We’re talking about everything from the paper clips that you buy at Amazon to medical devices, apparel, exercise equipment. I think everyone is aware that there have been these huge floating queues of vessels unable to load because the ports are overloaded and the people who are actually physically doing the unloading, these are the dockworkers, if there’s an impasse in these contract talks, that’s potentially a very big deal, not just in the United States, but worldwide.
Miller: Are those delays still an issue in terms of unloading and unloading or boats, waiting 50 miles offshore?
Goodman: Yeah, they are. They’re somewhat less of an issue than they were a couple of months ago, but they’re still very much an issue. They’re part of a whole complex of issues. We’ve got warehouses, especially in Southern California, that are full. So there’s often no place to put the containers that you take off the ships. There’s a very primitive system for communicating with these so-called ‘dray’ drivers. These are truck drivers who move containers between ports and warehouses. So they get stuck in these long lines. We don’t have enough people driving long haul trucks or working in warehouses, which is largely a function of the fact that we’ve degraded those jobs, and there just aren’t that many takers, especially in very low unemployment. So there are all sorts of problems through the supply chain. And every time you fix one, another one pops up somewhere else, you know, whether it’s rail or highway. Certainly if there’s a problem with the dock workers, we’re gonna feel it, all sorts of places throughout the chain.
Miller: What would a strike look like now, given all these other issues that are still present then.
Goodman: Well, we have more backlogs of ships. We have ships floating in the ocean waiting to unload. The backup could extend all the way to ports in China, which would have no way to load ships. The more ships that are stuck, just floating off ports, the fewer ships there are to actually move things, places where they can go. The effects would be found everywhere, as far as well as Rotterdam, the largest port in Europe, which is still contending, if you can believe it, with the effects of the shutdown of the Suez Canal a year ago, disruptions to Chinese ports and places like Shenzhen and Ningbo and Shanghai. Every time you shut down some part of the global supply chain recovery takes many months.
Miller: What kinds of issues have cropped up in the past, when this union and these ports operators have been negotiating over new contracts?
Goodman: Well, a big sticking point is automation. The people who operate the ports, the leaseholders, they are controlled by and large by these global shipping carriers now making record profits and they, like most publicly traded companies that are working for shareholders, they want what they call efficiency; they want to move more stuff with less labor costs. And the way they’ve achieved that in many parts of the world is by automating jobs and bringing in robots, and the dockworkers opposed this, because they want some say over the pacing, and which jobs can be automated and what that means for the remaining workers. You know, any threat to a dock worker’s job is going to be opposed.
Miller: You do note in a recent article, that some of these dock workers are some of the best compensated blue collar workers in the country, that with pensions and benefits, they often earn more than $100,000 a year. Do you have a sense for what the union is likely to ask for?
Goodman: The union’s been very secretive about what they’re likely to ask for. That’s not something that they’ve been willing to outline in conversations that I’ve had. I mean, we know the big picture. They are cognizant of the fact that they worked through the pandemic, we’re still in the pandemic, but the worst of the pandemic. We saw dozens of their members stricken, I mean people dying of COVID, and yet they continue to work. They’re also cognizant of the fact that the employers’ association, the Pacific Maritime Association, represents these global shipping carriers that, according to an estimate I put in the paper recently, are on track to log $300 billion in profits this year. And this is coming from the much higher rates of shipping. I mean it used to cost something like two or $3,000 to move a container from a port in China to a west coast port. People are now paying 25, 26, $27,000 for that same journey. So that’s an awful lot of money for these huge shipping conglomerates who in the states have an exemption from antitrust law. There are, they’re divided into three alliances, sort of like the airline alliances we’re used to, you know, Star Alliance, et cetera. And these three alliances collectively control something like 90% of the traffic across the Pacific. So the dock workers are seeing a situation where their bosses are making more money than they’ve ever imagined, where they’re doing a very dangerous job, even in the best of times. I mean, they’ve all got stories of watching coworkers crushed to death by falling containers and where they’ve done this job through the worst pandemic in a century and they’re expecting to get a piece of the action.
Miller: I don’t remember a time when there has been more global attention that’s being paid to even just a phrase, ‘the supply chain,...’
Miller: … for obvious reasons. Do you have a sense for what that will mean in terms of the potential leverage that both sides have in this, politically, and in sort of the larger national picture?
Goodman: It’s fraught, right, on the one hand, the dockworkers undoubtedly feel that their leverage is very high, because President Biden has said that his number one economic goal is containing inflation. Inflation is something that policymakers are talking about around the world. This is a highly sensitive topic in, in wealthy countries and in poor countries. We’re talking about rising hunger and malnutrition and this goes beyond the issue of the pandemic. There’ve been hits to the supply chain from the Ukraine war, from China’s ‘Zero Covid’ strategy, which has recently shut down ports and factories. Again, there are a lot of components to this, but certainly the dockworkers understand, ‘Hey, if they don’t give us a deal we like and we slow down work as a negotiating tactic,’ which is something management has at least claimed they’ve done in the past or we even threaten to strike, let alone have a strike, that will have enormous ramifications. I mean, we’re already seeing them. We know that American importers have been diverting shipments from west coast ports to east coast ports in anticipation that there could be problems. So all of that sets up stakes where the dock workers feel that they have leverage. But you know, the employers understand that a strike would be highly damaging economically, and the dock workers could be demonized. I mean, we don’t know what the Administration would do in the face of an impasse. There are a lot of powerful political actors who normally don’t spend a whole lot of time, as you know, thinking about things like the supply chain, who are now living in a time where you know, let’s face it, that what I’m calling the ‘great supply chain disruption,’ has become like a bar time conversation and and a source of real anxiety. There are a lot of powerful actors who will use what leverage they’ve got to make sure there is some kind of contract. So it’s a very complex dynamic.
Miller: Taking the bigger look here, moving past the immediate question of these labor negotiations. I’m curious, given that what is very apparent to the public now, that the global trade system is a very delicate system of machines that are very interconnected and a disruption in one place can ripple and have gigantic effects everywhere. It could cause havoc worldwide. Are people talking now about ways to make this overall system more resilient without sacrificing the efficiency that we have come to rely on that leads to cheap goods?
Goodman: Yeah, it’s definitely a conversation. A lot of academics are having that conversation. Environmental activists are having this conversation. This thing is broken down right? We have now lived through a time when, comically, we seem to have run out of toilet paper, much less comically, we weren’t able to supply our frontline medical workers with critical PPE in the first wave of the worst pandemic in a century. So, the word is out that we’re doing a lot of things that don’t make a lot of sense. I did some research recently where I kind of x-rayed a traffic jam off of Long Beach, I tracked one container from China to a warehouse in Mississippi and I got some data that showed me, what was on these roughly 50 ships that were just stuck floating off of Long Beach for five weeks and…things like Fiji water, Heineken beer, cornhole games, huge amounts of fertilizer. You know, a lot of stuff that doesn’t necessarily…I mean, if we’re thinking about climate change, shouldn’t be moving at all. Do we really need to make plastic bottles and fill it up with water on a different continent and ship it across the Pacific Ocean while burning fuel at a time in a time when it costs a lot of money. And now that it costs more money, it’s certainly an opportunity to consider, what are we doing here, and what principles are driving this? But it’s important to remember that one key principle has brought about the supply chain that we know, and that is the shareholder interest, and publicly traded multinational companies have very effectively made use of cheap and reliable sea transportation to make stuff in places where they can do it at scale and cheaply and to move it to consumers in wealthy markets and to lower the cost, which is good for sales and it’s good for shareholders. And that system has been very beneficial to the people for whom it’s been built. It’s delivered us the big box retail domination. And there have been shocks to the system before. I mean the first time I ever read about the supply chain was back in 1999 when there was an earthquake in Taiwan, and that knocked a bunch of semiconductor factories. offline. Taiwan was then a much smaller share of the global chip market than it is now. Fukushima, the terrible earthquake and typhoon in Japan knocked a lot of industry offline. And there were more conversations about resilience and along the way, we’ve been governed by this concept of ‘just in time manufacturing,’ which sounds really smart –- why do you need a warehouse a bunch of parts when you can rely on the internet and sea transport to move stuff to where you need it as you need it. But this has really been turned into a way for the shareholder class to, instead of spending dollars, sticking extra parts and warehouses against an emergency, like a pandemic, they spend the money on share buybacks and dividends. And typically what happens is when we get past the shock, when we get back to quote unquote ‘normal,’ the shareholder interest reasserts itself. It’ll be interesting to see what happens this time.
Miller: Peter Goodman, thanks very much.
GoodMan: Thank you.
Miller: Peter Goodman is the author of Davos Man: How the Billionaires Devoured the World. He is a Global Economic Correspondent for The New York Times.
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