Could congestion that plagued West Coast ports in 2021 actually get worse in 2022? That all depends on whether a new contract can be finalized between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU). The current contract between the two entities expires on June 30, 2022. If a new contract is not reached, the congestion shippers experienced in 2021 will seem mild compared to what the industry can expect starting on July 1, 2022.
The U.S. supply chain system has been under immense pressure since July 2020. A potential shut down of West Coast ports right before the traditional peak shipping season would be catastrophic to all stakeholders involved in the supply chain.
Carriers have already allocated their East Coast and Gulf Coast cargo space for 2022. That means bypassing West Coast ports in favor of East Coast and Gulf Coast sailings will be a difficult option for the majority of shippers. The carriers have not released any concrete contingency plans should a strike or lockout occur. It is possible that some carriers could divert West Coast bound vessels to East Coast or Gulf Coast ports. If that happens, the diversions will create huge operational challenges for both shippers and carriers.
Major U.S. trade associations have already gone on the offensive in hopes of pressuring PMA and ILWU to begin talks now to diffuse the contentious situation. Automation, jobs and wages will once again be at the forefront of negotiations. The entire shipping industry will be watching how the negotiations progress over the next few months. On a positive note, most experts believe an agreement will be reached prior to July 1st. They also believe that failure to reach an agreement will result in congestion that will wreak havoc on the U.S. supply chain that the industry has never experienced before.
