America's highest paid union at existential risk from widened Panama Canal
West Coast Longshore and Warehouse Union, whose members earn average wages and benefits of $285,000 by raising labor hell, is facing existential risk from the widened Panama Canal.
The San Francisco Chronicle described the 42,000 card-carrying International Longshore and Warehouse Union members that since 1934 has maintained iron-fisted control of all 29 West Coast commercial ports, "the aristocrats of the working class."
ILWU full-time workers receive an average of $175,000 in annual wages, along with a non-wage benefits package costing more than $110,000 per active worker per year. Benefits include fully paid health care, employer 401(k) matching, 13 paid holidays, six weeks of paid vacation, and eligibility for $95,000 pensions with lifetime health care.
The ILWU for the last 85 years has claimed to be a "beacon of solidarity" to the U.S. organized labor movement by regularly carrying out strikes, engaging in numerous work slowdowns, and refusing to cross any other labor group's picket lines. The ILWU was expelled from the AFL-CIO predecessor for its founder's known communist ties.
Beginning in November 2014, 13,600 unionized dockworkers shut down all California ports in a bitter four-month ILWU strike that caused $2 billion a day in damages to the U.S. economy and caused about one third of West Coast agricultural exports to rot.
Despite a 75-percent collapse in private-sector union membership since 1980, due mostly to offshoring 12 million U.S. manufacturing jobs to China, ILWU-handled traffic at the Port of Los Angeles spiked 20-fold from 480,000 to 9.5 million containers in 2018.
But the April 2016 opening of the widened Panama Canal has created the first existential threat to the ILWU's monopoly on handling 80 percent of Asian freight. The $5.25-billion, decade-long project increased maximum transit capacity by over 2.5 times, from 5,000 container "Panamax" ships to 13,000 container "Neopanamax" vessels.
The widened canal is changing U.S. freight patterns on both coasts and within the United States. Shippers pay about $420 to load or unload containers at the ILWU-controlled Port of L.A. versus $240 at Atlantic coast ports including Savannah, Charleston, and New York City. Plus there is the $2.50-per-mile cost of shipping containers by double-stacked trains across the U.S. versus $0.80 per nautical mile to ship a container on oceangoing ships.
That means Asian shipping costs per container to the East Coast are now about $2,000 to $3,000 cheaper using Neopanamax ships transiting the Panama Canal versus unloading at the Port of L.A., trucking to a railhead, and then delivering by train.
The Panama Canal authority has slowly grown reservations for Neopanamax transits to eight per day. Having recently completed its 5,000th transit, the Panama Canal is set to ramp up Neopanamax volume, plus add cruise ships and LNG tanker passages.
In the first tangible proof the Panama Canal widening is an existential threat to the survival of the International Longshoreman and Warehouse Union elite membership, the Port of Los Angeles just announced that its total import and export "loaded" container volumes for February 2019 tanked by 9.21 percent to 490,870 from 540,681 in 2018.
The dire plunge in West Coast port container handling volumes is also hammering U.S. rail car traffic. The American Association of Railroads reported that railcar traffic plunged by 7 percent for the week ending March 9 versus the same week in 2018.
The ILWU master contract with the Pacific Maritime Association employers is set to expire on July 1, 2019. Most analysts predict that another cycle of labor turmoil and port slowdowns will hammer the U.S. economy until the union gets more money.
But the Panama Canal widening has ended ILWU's ability to shut down huge sectors of the U.S. economy. For the first time, it may be locked out union strikers who lose money.