You might’ve noticed the recent headlines about some significant contract negotiations between two major groups: the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). These organizations play a huge part in the operations of our West Coast ports, basically the busy highways for goods entering and leaving the USA.

ILWU and PMA Discussions

Now, if you’ve been following this story, you’ll know it hasn’t been a smooth ride. For over a year, the ILWU and PMA have been in back-and-forth discussions, trying to hash out a new contract. The sticking point? Well, it was mostly about wages and working conditions. The dockworkers were pushing for a pay raise, which the employers felt was a bit too steep. These disagreements were causing major disruption and, in some cases, even led to labor unrest at several cargo terminals. It wasn’t a good look, and there were fears that if things escalated, it could potentially harm the entire US economy.

Why Disruption Impacts Both the Supply Chain and Consumers

So, why are port disruptions a serious issue? First and foremost, they can cause significant challenges for global supply chains. These disruptions can occur due to a range of factors like natural disasters, labor strikes, infrastructure failures, or even pandemics (as we experienced firsthand in 2020 onward). The consequences of this, of course, are that it can lead to delays in cargo handling, customs clearance, and other processes, resulting in increased costs for businesses.

Companies may face difficulties in obtaining necessary inputs for production, leading to slowdowns, stock shortages, and dissatisfied customers. These costs may include penalties for exceeding allowed time at port, storage fees, rerouting expenses, and extra inventory holding costs. This leads all the way up to the consumer who is then hit with more fees, higher prices and shortages.

Factors like location and industry are huge factors as well when it comes to disruption. Regions heavily reliant on imports or exports may experience more significant disruptions. Industries such as automotive, electronics, pharmaceuticals, and perishable goods are particularly vulnerable due to their time-sensitive nature. In the case of the ports we’re discussing – it essentially means that a critical blockage on the west coast leads to impacts across the country.

Unilogic has taken leadership in identifying a strategy that looks to both solve supply chain disruption issues while also focusing on building resilience. These strategies involve diversifying transportation routes, utilizing advanced tracking technologies, optimizing inventory management, exploring alternative ports, and establishing contingency plans for emergencies.

An Agreement to End Supply Chain Disruption In the West Coast

But now, there’s some light at the end of the tunnel. The two sides have reached a tentative agreement on a contract that would last six years and cover workers at 29 ports along the West Coast. This is big news because it could bring a lot more stability to the ports and keep trade flowing smoothly.

Although an agreement has been reached, it still needs to be approved by the union’s members. This process could take several months and isn’t always a sure thing. We saw this last year with rail union negotiations, which dragged on longer than anyone expected.

However, this agreement is a positive sign and could make things a lot easier over the next six years. This is particularly good news for companies like Unilogic. Less disruption at the ports means our operations in Chicago can run more smoothly and our clients will face fewer hitches. It’s also a big boost for our expansion plans on the West Coast. With more predictable port operations, we can focus on growing our business and serving our customers better. Keep an eye out for more updates on this story, it’s certainly one to watch!