NCPA - National Center for Policy Analysis

U.S. Ports, Labor Unrest and the Threat to National Commerce

July 2, 2015

America's economic growth depends on ports for a competitive edge in exports and for the flow of imported goods that bolster Americans' paychecks. Smooth operation of America's 29 West Coast ports is vital: in 2013, goods totaling $2.1 trillion, or 12.5 percent of U.S. GDP, entered the country through them, writes Diana Furchtgott-Roth of the Manhattan Institute.

With international trade now a substantial and rising component of U.S. GDP, port slowdowns and shutdowns present a growing threat to national commerce.

  • The West Coast port slowdown of 2014-15, apple farmers lost $19 million per week, while certain foreign companies had to air-freight goods into the United States.
  •  In 2002, an 11-day West Coast port lockout cost the U.S. economy $15.6 billion.

When foreign clients replace U.S. exporters with cheaper, more reliable alternatives, it can be difficult, if not impossible, to later restore such relationships. In 1926, Congress passed the Railway Labor Act (RLA) to ensure that commerce was not disrupted by labor disputes between railroad employee unions and management. At present, ports are governed by the National Labor Relations Act (NLRA), while airlines and railroads are required to abide by the RLA.

To avoid disruption before contracts between port unions and management expire, suppliers, retailers, and manufacturers can pursue these strategies:

  • Moving the governance of ports from the NLRA to the RLA.
  • Placing U.S. ports under the auspices of the NMB would mean that national commerce and transportation would remain uninterrupted throughout the dispute and mediation process.
  • If the dispute is a substantial threat to transportation, a Presidential Emergency Board (PEB) may be created, with the board responsible for making recommendations on an agreement. If the parties reject the PEB\'s recommendations, Congress has the option to take action and impose a settlement.

Source: Diana Furchtgott-Roth, "U.S. Ports, Labor Unrest, and the Threat to National Commerce," Manhattan Institute, April 2015.

 

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