Ending an 11-month-long disagreement, which was an unexpected gift for the airfreight industry, the Pacific Maritime Association (PMA) voted overwhelmingly in favor of a new labor contract with the International Longshore and Warehouse Union (ILWU) in late May. The ILWU has agreed to ratify the new contract, which will officially end the stalemate.
The new contract includes provisions to improve the arbitration process and streamline healthcare benefits for affected workers. Conditions of the contract will be retroactive to July 1, 2014, and will continue through June 30, 2019.
Extended contract negotiations between the PMA and the ILWU came to a boiling point in late 2014, leading to disruptions in maritime commerce for 29 major West Coast ports that together see roughly US$1 trillion worth of goods each year. The conflict directly resulted in a shift away from West Coast ports in favor of other alternatives such as air routes and other port locations across the United States. According to The Journal of Commerce, in April alone, activity at East and Gulf coast seaports grew 12 percent and 20 percent, respectively, while West Coast port activity declined by 4 percent. As a result of the contract, companies that rely on goods imported to the West Coast are expected to see shipping costs drop and inventories rise, which could soften the market for air cargo transportation.