Labour deal in US averts shutdown of 29 West Coast ports

Los Angeles

WEST COAST dockworkers and their employers ended their nine-month standoff with a five-year contract deal, averting a shutdown of 29 ports that could have cost the US economy US$2 billion a day.

"This is now in the rear-view mirror," Labor Secretary Tom Perez told reporters late on Friday outside the San Francisco headquarters of the Pacific Maritime Association, which had been locked in the contract battle with the International Longshore and Warehouse Union. "A significant potential headwind for this economic recovery has been removed."

Mr Perez brokered a compromise on the issue of whether the union could fire arbitrators in workplace disputes, which had held up settlement on a contract after the sides agreed on other terms. Instead of a single arbitrator, a panel now will hear grievances, union president Robert McEllrath told reporters.

The labour standoff had reduced productivity at West Coast ports by as much as half since November. California citrus fruit bound for Asia spoiled on the docks, while Mardi Gras beads destined for New Orleans instead languished on cargo ships off the Southern California coast. Carmakers flew in vital components at more than 10 times the cost of shipping them, while Japanese McDonald's restaurants rationed french fries because of a shortage of Idaho potatoes.

Mr Perez had arrived in San Francisco on Feb 17, dispatched by President Barack Obama after a federal mediator failed to bridge the gap between the two sides.

"This is great news for the parties involved in the negotiation and a huge relief for our economy - particularly the countless American workers, farmers, and businesses that have been affected by the dispute and those facing even greater disruption and costs with further delays," the Obama administration said late on Friday in a prepared statement.

Mr Obama also called on the parties to cooperate to clear the backlogs and congestion in the ports as they work towards a final agreement, according to the statement.

The ports agreement came as the United Steelworkers, representing 30,000 US oil workers, called on four more plants in Texas and Louisiana to join its strike as talks dragged on with Royal Dutch Shell, which is negotiating for oil companies. The work stoppage began on Feb 1 with workers leaving nine plants from California to Texas, and expanded to two BP refineries in the Midwest a week later.

The Port of Los Angeles, the nation's busiest, handled 29 per cent less cargo in January 2015 compared with January 2014, and volumes were down 19 per cent in neighbouring Long Beach, the second-busiest port, according to statements from both ports.

The contract agreement won't end cargo bottlenecks right away, even after port operations return to normal by Saturday night, Mr Perez said.

"The parties have agreed to ensure that there are fully operational ports up and down the West Coast beginning tomorrow evening," Mr Perez said on a conference call with reporters. "I am confident that they understand the urgency of the task of eliminating the backlog." Talks had broken down this month over a union demand that it be able to fire arbitrators in workplace grievances. The two sides had reached terms over salaries, benefits, the right of union members to maintain and repair truck chassis used to haul shipping containers and health care.

On Feb 4, the management association publicised details of its contract offer, including raises of 3 per cent per year for full-time dockworkers, along with maintaining fully paid health care that costs employers US$35,000 per worker per year. The maximum pension would rise to US$88,800 per year as part of the proposed five-year contract, the association said at the time. The union and Mr Perez wouldn't confirm details of the final deal on Friday evening.

The tentative settlement still needs approval from unionized dockworkers from San Diego to Bellingham, Washington.

The West Coast ports, responsible for 43.5 per cent of US trade, have been operating at reduced capacity since late October as dockworkers slowed cargo movement and port employers cut shifts.

The deal came after Mr Perez gave the dockworkers' union and shipping lines and terminal operators at the ports until the end of Friday to respond to a contract settlement he proposed. He said that had they not reached an agreement, he would have moved the talks to Washington. BLOOMBERG