by Michael Hansen, Hawaii Shippers Council, September 8, 2015

The American Shipper Magazine reports that a U.S. Commerce Department advisory committee is considering a resolution that would propose the federal government become more proactive in respect of labor disputes that have a broad affect on the national economy.

This is being considered in light of the West Coast Port Slowdown that began on October 31, 2014 and ended February 20, 2015, with a tentative labor agreement. The residual effects of the slowdown were finally cleared about six months later. The Slowdown had an economic impact on Alaska, Guam and Hawaii,

The matter is before the 45 member Advisory Committee on Supply Chain Competiveness, which is administered by the Supply Chain Team of Office of Supply Chain, Professional and Business Services (OSCPB), International Trade Administration (ITA), U.S. Department of Commerce.

The ITA website describes the organizational entities as follows:

The 45-member Advisory Committee on Supply Chain Competitiveness was formed to provide the Secretary of Commerce with detailed advice on the elements of a comprehensive national freight infrastructure and freight policy to support U.S. supply chain and export competitiveness. The Committee’s work is intended to further the Administration’s export, economic, and job growth goals.

The Supply Chain Team provides expert guidance on industry analysis, competitiveness, trade policy and negotiations regarding a broad variety of services industries including: express delivery; cold chain and distribution services (retail, wholesale, franchising, direct marketing, direct selling); transport services (air, maritime, rail, trucking); and physical infrastructure (architecture, engineering, and construction) that can make supply chain networks more competitive.

Key excerpts from the American Shipper Magazine:

Industry representatives on a Department of Commerce advisory committee will vote at their regular meeting next month on a recommendation for the federal government to get involved sooner in labor disputes, like the recent one between dockworkers and marine terminal operators at West Coast ports that took almost nine months to resolve, that have boomerang effects on the rest of the economy.

The contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expired in June 2014. Talks stalled and became increasingly rancorous, leading to a series of tactics by both sides that effectively reduced labor and operating hours for cargo handling. This resulted in weeks-long cargo backlogs to the consternation of importers and exporters with crucial goods stranded at ports or their own facilities.

No official tally of the port slowdown’s economic damage has been done, but the costs in spoiled agriculture products, extra storage fees, transportation costs to reroute cargo or use airfreight, and lost sales were at least in the hundreds of millions of dollars and helped contribute to what various estimates say was a 0.2 to 1 point headwind to U.S. GDP growth over the winter months.

Mike Steenhoek, executive director of the Soy Transportation Coalition, agreed at the June 24 meeting of the Advisory Committee on Supply Chain Competitiveness to draft a letter for Commerce Secretary Penny Pritzker requesting the executive branch determine an earlier engagement point in labor talks before ripple effects spread through the economy.

Steenhoek said the intent of the letter would not be to interfere with the ability of parties to negotiate labor contracts, “but there also needs to be acknowledgement that not all negotiations are equal. If Alex Rodriguez and the N.Y. Yankees are at an impasse on his contract, unless you’re a Yankees fan, who cares? But there are certain constituencies in this country that if they don’t get their relationship right it has a profound effect on a lot of other industries...

“What is the glide path that if we’re X days from a contract expiring and there has been an absence of any kind of progress, then should that trigger any response from the administration? If we start seeing evidence of disruption of the supply chain that should be a signal to ratchet it up,” he said.

The question is whether current statute provides more latitude for federal involvement than the way many today interpret it, Steenhoek added.

The Senate Commerce Committee in late June forwarded a bill aimed at providing more transparency into port performance and identifying potential disruptions before they inflict serious damage on the broader economy. One of the bill’s provisions requires port authorities to submit port metrics to the Department of Transportation, which would report to Congress on a port’s performance three months before a maritime labor contract expires and then monthly to help indicate whether the labor discussions have impacted operations, the estimated economic impact of such disputes and roughly how long it will take for shipments to return to normal. The path for a full Senate vote on the measure remains unclear at this point.