Unions Have Made Supply-Chain Problems Worse

National Review Online

Monday, October 18, 2021

 

Organized-labor headlines typically offer a zap of top-line shock — UPS is paying some drivers $134,000 a year? Philadelphia is paying a police detective $310,000 a year? — but those six-figure sums don’t capture the true cost.

 

As can be seen with the enormously costly backup at the port complex in San Pedro, Calif. — which handles about 40 percent of U.S. container-ship cargo — the issue is not so much high wages as highly rigid and inflexible labor practices.

 

The problem in San Pedro isn’t that the longshoremen are earning, on average, $171,000 a year ($194,000 for a clerk and $282,000 for a foreman) plus the usual generous benefits — the problem is that the ships are not being unloaded in a timely fashion.

 

Instead, the ships have been sitting at sea. Where there might normally be no more than one ship waiting at anchor for a spot to unload, there recently have been as many as 95.

 

The Biden administration has responded with an initiative that is perfectly Bidenesque: vague and fuzzy about the details, offering the appearance of action but very little of the real thing. The administration says it brokered a deal under which the twin California ports now operate around the clock. The 24/7 operation began “weeks ago,” according to White House flack Jen Psaki.

 

You will not be entirely surprised to find that this is not true.

 

Port authorities tell the Long Beach Post that there is no terminal at either facility currently operating 24/7. What has happened is that the port authority has launched a pilot program under which one terminal at Long Beach (there are seven) will operate 24 hours a day Monday through Thursday. The rest of the week, it will revert to its usual restricted hours. No other terminal is offering 24-hour operations at this time, and none has announced plans to do so.

 

If there ever is an actual transition to 24/7 operations at the ports, it will take months or years to implement. And it will not solve the fundamental problem — instead, it almost certainly will only replace one rigid and inflexible labor arrangement with a different rigid and inflexible labor arrangement.

 

Moving to 24/7 port operations today is a step in the right direction. It would have been a more intelligent step in the right direction 25 years ago. Most of the world’s major ports already operate 24 hours a day and have for a long time.

 

The ports of Los Angeles and Long Beach are not alone in their problems. The same global supply-chain disruptions that have complicated their operations have done the same at other major ports around the world. And the same labor disruptions — notably, a shortage of truck drivers — have challenged cargo operations everywhere from Rotterdam to Immingham. On top of all this, we have a shortage of warehouse space and the chassis used to transport containers by truck.

 

The California ports are not dealing with unique problems — but they are uniquely bad at dealing with them: When it comes to the timely unloading of ships, San Pedro is by far the least efficient port, according to industry experts, underperforming not only sophisticated global competitors such as Hamburg and Singapore but also far underperforming U.S. ports such as New York and Houston.

 

One of the distinctions that unfortunately gets abraded in our political debate is that there is a difference between a problem with labor unions and a problem with these labor unions. In 2020, the International Longshore and Warehouse Union, which represents the San Pedro dockworkers, was teetering on the edge of bankruptcy after a $94 million judgment against it in a corruption case involving illegal labor practices. It was using “work stoppages, slowdowns, safety gimmicks, and other coercive actions,” the court found, part of an effort to pry jurisdiction over some work away from another union. That judgment has since been reduced to $19 million — but that’s just haggling over the price of corruption.

 

These are not confidence-inspiring partners.

 

The economic disruption associated with the COVID-19 epidemic did not cause our supply-chain weaknesses — it only revealed them. American consumers, like many others around the world, quickly changed some of their patterns and habits, shifting their purchases toward durable goods and taking their business online, away from brick-and-mortar retailers, much more quickly and substantially than had been expected. That has consequences on both sides of the trade ledger: Even with the Biden administration keeping most of the Trump administration’s tariffs in place, both U.S. imports and exports are up, and the worldwide trade in physical goods is expected to climb by 8 percent in 2021.

 

There is no way that a highly regimented, clock-punching labor force was ever going to be able to adequately cope with that change. More important: There is no way that a highly regimented, clock-punching labor force is going to be able to adequately cope with the next one. And there will be a next one — having a more connected world means that all of us have exposure to events and conditions in places we rarely think about. That brings both great benefits and significant costs.

 

If there is a productive role for labor unions to play in our modern global economy, it is not imposing a 20th-century factory model onto a complex shipping and logistics industry that requires something more supple. In the 21st century, there is no whistle announcing the end of the shift.

 

The unions have shown that they can secure very high wages for dockworkers. Good for them.

 

Now, it’s time to show that they can get the job done.