Smoothly Running West Coast Ports Key to U.S./Asia Trade

The partial fall of socialism in India, after the 1991 financial crises, opened the door to international investment and to private operation of some state assets. This January 5, 2015 article “India private ports grab market share from government-owned rivals” reports:

Private port operators in India are rapidly gaining market share on their government-owned rivals, as chronic capacity constraints and infrastructure woes at some of the major public port complexes, including Jawaharlal Nehru Port Trust (Nhava Sheva), spur the diversion of cargo and vessels to nearby minor ports, according to an analysis of port data.

Some ports are run by state governments and others are privately managed:

Much of the gains in traffic at minor ports came from Adani Ports and Special Economic Zone (APSEZ), which operates a clutch of marine facilities, including its flagship Mundra, on the west coast, and also from a few modern, deep-water private hubs on the east coast, especially Krishnapatnam, Gangavaram and Karaikal. 

U.S. trade with Japan, China, South Korea, and Taiwan is carried mostly over the Pacific Ocean. This PPPIRC site explains private sector management of ports:

With the majority of global trade carried by sea, developing strong, well-functioning maritime transport infrastructure is a key element of economic growth for many developing and emerging countries. Public-private partnerships (PPPs) in ports have become a means to manage port operations more effectively, traditionally an exclusively government function. Different port management structures are used worldwide but in the majority of large and medium sized ports the landlord port model is used. In this model management responsibilities are delegated to the private sector, while the title in the land and assets remains with the government. 

Much like other large businesses, building and operating a port requires lots of investment. The August 3, 2015 WSJ article “Supersized Cargo Skips Small Ports: Hampered by a shallow, inland location and labor strife, Portland loses out on shipping container traffic,” looks at problems with Portland, Oregon. Though a city with “port” in it’s name, it now doesn’t have container line services. So farmers and other firms looking to export their goods to Asia face higher cost trucking them to Seattle or Tacoma ports first.

Those of us trying to use often congested I-5 freeway from Seattle and Tacoma to Portland now must share it with 1,700 more heavy trucks each week.

Left out of the WSJ story, however, are the ongoing battles with multiple labor unions reported in this January 30, 2015 OregonLive post:

Labor issues are affecting ports up and down the West Coast but shippers, port officials and importers all say the problems are especially severe in Portland, where labor disputes have disrupted work for more than two years.

The International Longshore and Warehouse Union blames Port of Portland officials and International Container Terminal Services Inc., the private company managing the port. Everyone else seems to blame the union (and other unions).

This February 13, 2015 OregonLive article, “What the heck is going on at the Port of Portland: A beginner’s guide to longshore, Hanjin, more,” reports:

A labor judge ruled in 2014 that the dock workers were intentionally slowing down work over a 2012 dispute over whether the longshoremen or members of the International Brotherhood of Electrical Workers Local 48 should plug, unplug and monitor refrigerator containers.

This article, “Port of Portland approves another rebate for terminal operator due to continued labor problems” from 2013 reports on the initial labor dispute between two unions, the Port of Portland, and International Container Terminal Services Inc.:

Litigation continues over the dispute, in which the International Longshore and Warehouse Union claims the equivalent of two jobs performed at the North Portland terminal by members of the International Brotherhood of Electrical Worker.

The longshore union denies staging slowdowns at the terminal. But a federal judge found workers did slow work and ordered them to resume the pace of loading and unloading containers.

Well, now the various unions have lost a lot more than those two disputed jobs.

What if port facilities could be operated without unions? U.S. trade with Asian countries is held hostage by complex and restrictive union rules that slow productivity gains and disputed that occasionally bring all trade to a halt as one did earlier this year.

“West Coast ports to begin tackling backlog after labor deal,” Reuters, on February 21, 2015, reports on the scope of U.S. exports disrupted by the port dispute:

According to the American Association of Port Authorities, some $3.8 billion worth of goods move in and out of U.S. seaports each day. 

The West Coast ports handle nearly half of all U.S. maritime trade and more than 70 percent of the country’s Asian imports. 

OregonLive reports, in “West Coast Ports Reopen, but Crippling Labor Dispute Has Already Cost US Economy Billions” on the costs to the U.S. economy:

The dispute now costs the economy about $2 billion a day, estimates Kevin O’Marah, the head of research for SCM World, a group of senior supply chain executives from companies that include Barnes & Noble, Nike, Microsoft and Shell. O’Marah bases that figure on a 2002 work stoppage, which cost about $1 billion a day.

A February 11, 2015 Bloomberg View post, “Dinosaur Union on Rampage in Western Ports,” suggests Jurassic Park like problems with U.S. port operations.

This LA Times article profiles the “Small but powerful union is at center of port dispute:”

The International Longshore and Warehouse Union represents 20,000 dockworkers, a fraction of the organized ranks of teachers, truck drivers or healthcare workers. But the port workers — who still queue up at hiring halls daily for work and spend years earning full membership — stand guard over a crucial chokepoint in the global economy.

For decades these “lords of the docks” have been paid like blue-collar royalty. Their current contract pays $26 to $41 an hour, with free healthcare for members. Some earn six figures with overtime. Even as a growing chorus of business groups clamor for a resolution to their months-long contract talks with the Pacific Maritime Assn., which represents shipping companies, the union sees little need to back down.

So… for Stoa debaters researching reforming U.S./Asia trade policy: would reforming federal policy toward operations handling trade with the listed Asian countries through West Coast ports be topical. And perhaps more challenging, are such reforms possible? President Reagan stood up to the striking air traffic controllers union. Could a future President, or affirmative team, stand up to the all-powerful International Longshore and Warehouse Union?