In the twilight hours Wednesday, the Pacific Maritime Association (PMA), representing terminals and port employers, and the International Longshore and Warehouse Union (ILWU), representing dockworkers, reached a tentative agreement on a new six-year contract.

The public announcement does not include any details of the agreement, which still needs to be ratified by members of both parties.

According to the ILWU and the PMA, Acting Labor Secretary Julie Su’s brokerage “played a key role” in reaching the agreement.

PMA President James McKenna said the new deal “recognizes the heroic efforts and personal sacrifices of the ILWU workforce” while ILWU President Willie Adams said the union will now “turn [its] full attention back to the operation of West Coast ports.”

The word “tentative” and what that meant for rail

This tentative agreement is certainly a large step in the right direction but put an emphasis on “tentative”.

Both parties will still have to ratify (vote on) this new contract.

Typically, this should seem like a simple formality. The negotiating is behind them and all that’s left in the way of an official six-year contract is just an ensemble of yea’s.

While everyone hopes that’s the case for the WC, last year’s tentative rail deal unraveled shortly after reaching this point.

Last September, four (out of 12 total) rail unions backed out of a tentative agreement for a new labor contract they reached with the Class I railroads.

Like the WC’s one-year impasse, rail’s talks had been stalling for nearly three years with a critical issue—sick leave—keeping the parties at the table.

Of course, last fall, everyone thought this tentative agreement meant peace finally for rail service and that the two sides turned the corner. However, everyone was quickly proven wrong.

Sick leave flung the unions and railroads back to negotiations which would go on for another three months while threatening nationwide rail strikes and lockouts.

By early December, with no signs of progress, the tentative agreement was approved via executive force of the Biden administration.

Yes, a new labor contract was signed, but it was essentially inked in blood.

Our experts are not saying this will be the case with the WC agreement, but how surprising was it to hear about a deal being reached this week?

Just a week before, job-related actions staged by union members flared up at ports while terminals were actively condemning them. It seemed like a rift grew between the ILWU and the PMA and, now, there’s all the sudden an agreement.

Barring any mind-control abilities Acting Labor Secretary Su may possess, there’s certainly something supernatural about this outcome.

The optimistic side says both parties felt the urgency of securing a contract ahead of peak season and port employers accommodated union demands for pay increases.

However, the pessimistic side suggests a false start for a new contract while both sides remain at odds with outstanding issues. It’s clear that both sides have felt pressure from stakeholders to come to an agreement.

Port employers are closing in on peak season and will want minimal disruption to productivity while maximizing profit. While, the union fears a punch to its reputation if it holds out for pay demands (as some wages are already relatively high). In other words, the ILWU would of likely taken the blame for any peak season disruptions as the public could interpret the union pontificating for egregious raises while compromising operations.

The maddening uncertainty, alternative routing leave a legacy

However, agreement aside, when it’s all said and done, as this tentative deal hopefully spells, this cycle of WC contract negotiations will be defined as a relatively undisruptive yet painfully uncertain 14 months.

Over the course of the talks, conditions at WC ports mostly indicated everything was, strangely, fine. At least, when compared to what everyone was fearing—supply chain disruption.

 Actual disruptions were never a dominating factor. Rather, it was the uncertainty. The maddening uncertainty.

In this case, ignorance was not bliss. A lack of updates from negotiating parties coupled with occasional anecdotes of rebellious dockworkers staging job actions paralyzed stakeholders in complete darkness. The only thing they could rely on was their imagination. 

The talks lasted well over a year. That was more than enough time for skepticism and anxiety to have brewed in stakeholders throughout all this.

Shippers rerouted cargo away from the WC in favor of the drama-free East and Gulf coasts. Already a pandemic-era legacy, alternative routing to other parts of the country to avoid possible disruptions will continue to live on in international shipping.

While the tentative agreement suggests WC ports may finally win back some of its discretionary volume that was siphoned during the negotiation cycle, the cat is out of the bag on the importance of keeping alternative routings in play even if there’s no immediate uncertainty for importer’s supply chains.  

Both the East and Gulf coast are now viable competitors to the WC in the transpacific, a development empowered by pandemic-era ingenuity and further proven practical thanks to stalling labor talks out on in the west.

If the tentative agreement ratifies, expect the WC to gradually recover some of its lost inbound share as the industry approaches a likely traditional peak season, however the East and Gulf are no longer playing second fiddle, like how they were pre-pandemic.