The Long Beach Port Strike….An Unfolding Economic Disaster

A lot of people at this week’s SCRC meeting were discussing the on-going strike in the port of Long Beach, California. It is remarkable to me how little attention this issue has received in the press, as it is in fact an economic disaster with massive implications that is unfolding as we speak. Most Americans are unaware of how much freight goes through Long Beach. One individual recently called their freight forwarder (in this case UPS), and asked “Are our people on strike?” The response was, no, it is the union. Their response was “Oh good. Well we should have an advantage as our people are working and not on strike!” This comment reflects how little people are aware of the role of labor at the LAX port.

What is the strike about?
The strike is over the fact that clerical union workers claim that it the port is “outsourcing work via computer”. What the union is saying is that the owners of the shipping terminals want to install computers for workers – and they claim it makes them less relevant. The strike is not about outsourcing jobs to India or China – it is simply replacing manual transactions with automated computer transactions – something that has occurred 25 years ago in most industries! Clerical workers at shipping terminals still use handwritten manual logbooks to record transactions! They do not use computers or telephones, but logbooks and “runners” to share documents with other parties on the terminal site. This is incredible.

The result of this ancient technology is alarming in terms of productivity of the terminal relative to other global terminals. A 3500 container vessel in China is emptied and filled in 24 hours. The same ships takes 7 days for the same processin Long Beach. This is what the strike is about- an industry that still refers to themselves as steamship lines.

It won’t be too long before retailers will push the Obama administration to become involved and hopefully work this out. But every day that goes by causes billions of dollars in late deliveries, and revenue impacts. Oceans freighters are at anchor in the port, waiting to be unloaded….and this is a bottlenecked resource. Experts at our conference believe that the strike will continue to be stretched out, and has not stretched out to the East Coast Ports where International Labor Union workers are also employed. Some companies have made plans to re-schedule shipments through non-ILU ports, including Miami, Jacksonville, port Everglades, Gulfport, and Puerto Rico. In any case, the strike will last longer on the West Coast than on the East Coat.

Even with backup plans, the strike is going to have a definite impact on an already weakened US economy. There is going to be a blip, and there will be disruptions and it will be bad. In all likelihood the strike will go stretch past the first of the year. This will likely become an emotional issue on the East Coast, but remain a financial issue on the West Coast. Longshoremen in New York do not have as much at stake as the West Coast workers, but are more political then emotional.

What is this over? Computers. There is not a computer to be found anywhere in buildings on this terminal. It is not outsourcing to India, it is nothing more than installing a computer. It’s time to re-think the value of these ports in our national infrastructure, and why not just the North American economy, but the global economy, is being held hostage by a group of clerical workers in Los Angeles.