Maersk Logistics Chief Sees Bumpy West Coast Labor Process

(Bloomberg) -- Contract-renewal talks for about 15,000 workers at the U.S.'s busiest ports on the West Coast are going to be a “bumpy process” amid the protracted congestion affecting those operations, according to the head logistics at A.P. Moller-Maersk A/S, the world's largest container liner.

“I hope for swift resolution but some of the issues will take some time to settle between the parties,” Vincent Clerc said Monday at the TPM22 Conference produced by The Journal of Commerce in Long Beach, California. “The only advice I have for customers is you have to hope for the best but you also have to plan for the worst.”

Though negotiations are expected to start as soon as next month, the current six-year contract between the International Longshore and Warehouse Union and their employers, represented by the Pacific Maritime Association, expires July 1. The PMA's members include 70 ocean carriers and terminals operating at 29 West Coast ports.

In the last round of contract talks that began in 2014, disagreements dragged on for nine months, creating an economic headwind across the country, a long line of waiting vessels and shortages for some consumer goods. According to an analysis by Copenhagen-based Sea-Intelligence, it took the shipping industry eight to nine months after a deal was reached in February 2015 to return to normal service.

This time around, the stakes are higher as the twin ports -- which handle about 40% of the U.S.'s seaborne imports -- are just starting to clear historic backlogs created by pandemic-induced supply chain disruptions.

As part of its contingency plan, Maersk has added a significant amount of capacity to the East Coast and ports in the Gulf of Mexico, Clerc said. He added that “it's a bit late” for customers who don't yet have alternatives in place.

“There's no way around southern California -- it is the main gateway in the U.S. and it is very congested to start with so it takes very little to have a very big impacts” on shipping times and supply chain,” Clerc said.

When it comes to preparing for the possibility of a port workers strike, it's hard to mitigate the risks, Wayfair Chief Executive Officer Niraj Shah told the conference. The online home goods retailer has the advantage of working with a wide range of suppliers, said Shah.