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Customers to ports and workers: Get it done!

The Port of Los Angeles
Tim Rue | Bloomberg | Getty Images
The Port of Los Angeles

More and more businesses are getting frustrated with the labor and traffic problems on the West Coast.

Some 175 industry groups representing agriculture, manufacturing, retailers, and other import/export operations sent a letter Friday to the dockworkers' union and port terminal operators telling them to get their act together and agree to a contract.

"As customers of your ports, and industries affected by their operations, our members desperately need this negotiation to be concluded and operations returned to normal levels of through-put," the business groups said.

West coast dockworkers, represented by the International Longshore and Warehouse Union, have been without a contract since July. Management is represented by the 72-member Pacific Maritime Association.

Negotiations seemed to be productive until autumn, when management accused the union of engaging in slowdown tactics. The union disputed the claim, arguing that mis-management and equipment shortages were to blame for growing traffic delays at the ports.

Regardless of the blame, businesses moving cargo through the West Coast—which handles just under half of the containerized freight moving in and out of the United States—have been frustrated.

"Supply chains across all of our industry sectors have already been adversely impacted due to events far beyond our control over the past several months," the business groups said in their joint letter. "It is a black eye for the broader economy and some jobs have and will continue to be lost as a result of continued delays at the ports."

Indeed the latest "beige book" from the Federal Reserve, the central bank's quarterly look at economic activity, noted several instances of businesses hurt by West Coast port delays. And some companies hit by the traffic jams have already started rerouting traffic to Atlantic coast ports.

And the business groups warned in their Friday letter that trend could continue.

"The stakes are extremely high and the uncertainty at the West Coast ports is causing great reputational and economic harm to our nation," they said. "Policymakers in Washington, DC cannot solve the myriad of issues surrounding these talks, but the competitive marketplace will respond if you continue on this current path."

A federal mediator was invited into the contract talks at the beginning of January. In the meantime, the West Coast port employers have cut down on night shifts at the ports.

"Reducing vessel cranes during the night will help us continue to clear out the yards, where with ILWU has been withholding certain skills," said a spokesman at the time.

The union said the move was aimed at exacerbating the congestion problems, thereby putting more pressure on the talks.

"The employer is making nonsensical moves like cutting back on shifts at a critical time, creating gridlock in a cynical attempt to turn public opinion against workers," said ILWU President Bob McEllrath in a statement last week. "This creates an incendiary atmosphere during negotiations and does nothing to get us closer to an agreement."

The PMA said: "Throughout our eight months of negotiations with the union, the PMA has maintained our sense of urgency on two fronts. The first is reaching a contract with the ILWU that ensures America's West Coast ports can be as competitive as possible, given the realities, pressures and constant changes in global shipping. The second is avoiding union slowdowns and other disruptions at the ports as a bargaining tactic, which not only create immediate harm in local economies, but cause long-term – even permanent – reputational damage as customers and shippers make alternative plans. Unfortunately, despite our sense of urgency in resolving the contract talks and getting our ports moving again, the union's slowdowns continue and the resulting operational environment is no longer sustainable."

The ILWU repsonded: "The congestion problem at west coast ports pre-dates any accusations of slowdowns, and stems from industry decisions that are causing delays for customers and making work more difficult and dangerous for dockworkers. It is unfortunate that port employers recently decided to curtail port operations and reduce hours at a time when customers are already suffering from delays."

The average West Coast longshoreman makes an average of $147,000 a year, according to PMA statistics.

Employers staged a lockout in 2002. Those 10 days cost the economy upwards of $1 billion a day by some estimates. The White House had to order the ports reopened. A recent study suggested another lockout would double those costs if it went longer than 20 days.