West Coast Ports Union, Employers Reach Pact

Updated Feb. 21, 2015 12:59 a.m. ET

West Coast port employers and their union said they reached a tentative five-year agreement on anew contract late Friday. The pact brings an end to a nine-month standoff that resulted in significantslowdowns at the ports.

The International Longshore and Warehouse Union and the Pacific Maritime Association werelocked in negotiations all day Friday after the White House sent Secretary of Labor Thomas Perez tourge the two groups to come to an agreement. He threatened to send the parties to Washington,D.C., if the situation wasn't resolved by the end of the day.

Union employees, as well as members of the maritime association, will need to ratify the contract.

"After more than nine months of negotiations, we are pleased to have reached an agreement that isgood for workers and for the industry," said maritime association President James McKenna andunion President Bob McEllrath, in a joint statement.

The two sides didn't release details of the agreement. Mr. Perez said the ports would resume fulloperations Saturday evening.

The main sticking point in the negotiations was the issue of arbitration, Mr. Perez said late Friday ina conference call with reporters. Currently, four regional arbitrators serve as judges in disputesbetween union workers and employers. That system will change under the new agreement, he said,though he declined to elaborate other than to say it will ensure fair treatment.

"The parties have agreed to ensure there are fully operational ports up and down the West Coastbeginning tomorrow evening," Mr. Perez said. "I am confident that they understand the urgency ofthe task of eliminating the backlog."

The White House expressed gratitude to Mr. Perez in a statement late Friday, saying the agreementwas "a huge relief for our economy--particularly the countless American workers, farmers, andbusinesses that have been affected by the dispute and those facing even greater disruption and costswith further delays."

A pact would be welcome news to shippers whose goods have been delayed for weeks by allegedwork slowdowns, some suspended nighttime and weekend operations and continuing congestion atports along the West Coast--particularly at Los Angeles and Long Beach. It is expected to be months,however, before cargo snarls untangle and shipping returns to normal.

Port of Los Angeles Executive Director Gene Seroka estimated last month that it could take eightweeks to get the port back to normal, while other logistics professionals have said it could take up tosix months.

In San Pedro, Calif., home to thousands of longshoremen and their families, the usual racket ofcranes moving containers and trucks lining up to load cargo at the Port of Los Angeles had fallen

silent at night for weeks.

"It's so weird to not have them working out there at night," said Janice Hahn, the U.S.Congresswoman who represents San Pedro and the surrounding area, the nation's primary entrypoint for cargo of all kinds from Asia. "It's so eerie."

At Godmother's Saloon in San Pedro, 59-year-old longshoreman Jack Bagliazo said Friday night thatthe dockworkers were ready to get back to a normal schedule.

"Nobody wanted this," Mr. Bagliazo said. "It took nine months--you wonder, what were both sidesasking for?"

Oakland Mayor Libby Schaaf has questioned whether the ports will ever return to normal, as someshipping companies may choose to continue to use other ports.

"As we certainly learned from the 2002 lockout, when that business goes away, most of it nevercomes back," Ms. Schaaf said.

The Port of Oakland is typically a second stop for a number of shipping lines after the ports of LosAngeles and Long Beach, and importers use it to ship items such as produce and wine back to Asia.

However, some carriers have been skipping that port, instead dropping off all cargo in SouthernCalifornia or choosing a completely new route to ports in Canada, Mexico or on the East Coast.

Even with the tentative agreement, the ports face a number of structural challenges that contributedto worsening congestion over the past year. Global shipping companies in recent years have tried toincrease their economies of scale through using larger cargo ships and sharing ships, which meanscargo is often out of order for unloading.

In addition, the shipping companies shed their chassis, which are used by trucks to haul containers,

selling them to leasing companies that at times have struggled to deploy them where needed.

The slowdown at the West Coast ports has caused widespread pain for retailers, meat and poultrycompanies, and manufacturers across the country. Major ports that have reported January importand export volumes showed a precipitous drop in cargo.

Demonstrating the magnitude of the problem, on Friday morning 27 ships were at anchor outsidethe ports of Los Angeles and Long Beach. On a typical February day last year, no ships were in line.

Write to Laura Stevens at laura.stevens@wsj.com

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