Labor Strife in the Shipping and Logistics Industry: An Overview

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Since the end of the Covid pandemic, one of the dramatic results has been the increase in labor strife in the logistics industry.

It seems like everyone is upset and angry. With potential strikes being resolved or looming, high-profile labor issues keep making the news. From U.S. freight railroads to U.S. West Coast dockworkers to Canadian West Coast dock workers to UPS, there does not seem to be an end to the labor issues in our industry. Whether you are pro or anti-union, there seems to be the same issues cropping up in the industry. There are so many causes and effects that are taking a toll on our industry.

Firstly, one of the causes is the labor shortage.

The U.S. Chamber of Commerce shows in their latest data that there are 9.8 million job openings in the U.S. but only 5.9 million unemployed workers. In fact, the labor participation rate has dropped from 63.4% in February 2022 to 62.6% today. Some of the contributing factors of that difference include over half have changed their lifestyle with 17% having retired, 19% transitioning to homemaker and 14% working part-time. For younger workers (25-34 years old), 36% say they are now more focused on acquiring new skills, education and training. About 49% are looking for remote work and are not willing to take jobs that do not offer that opportunity. The result is that the labor market is tighter than before the pandemic. For workers, that means continued leverage to secure pay increases and better working conditions even as the economy cools.

Sadly, for U.S. freight railroads, labor issues are nothing new, but since the pandemic they have been on the rise.

The railroad industry slashed almost 30% of its workforce over the past six years, cutting pay and other costs as companies increased profits, stock buybacks and dividends for investors. The freight railroads carry 30% of all U.S. goods and a rail strike would have cost the U.S. economy approximately $2 billion per day. The railroad and its employees have been at logger heads over employee pay and quality-of-life issues, like paid time off, schedule flexibility and attendance policies. BNSF implemented an attendance policy based on a points system that the union called, “the worst and most egregious attendance policy ever adopted by any rail carrier.” Also, on the nation’s freight railroads, workers must be on call seven days a week due to staff shortages and workers’ pay was frozen for the past three years. Even though a deal was tentatively reached in the fall of 2022, it was not until the first quarter of this year that the railroads and union agreed to a paid sick leave agreement.

Additionally, U.S. West Coast dock workers kept everyone on the edge of their seats for the better part of a year.

Their contract expired in July 2022, and it was not renewed until June 2023. The drama played out for months prior to the contact expiration and all the way through the renewal as both sides negotiated through the press. When the union started to engage in work stoppages, the President’s Executive branch got involved in getting a deal negotiated and signed. Their union represented 22,000 workers and covered 29 Pacific coast ports that handled almost 40% of U.S. Imports. At the time, the fear was that any work slowdown or stoppage would have disastrous results to the U.S. economy and the already strained supply chain. So, what were the main grievances of the union? Port automation is always a big issue with the union as they don’t want to lose membership; but they were also looking for pay increases, especially considering the difficulties in working the ports during the epidemic and the record profits that the ocean carriers and terminals made during this time.

Furthermore, West Coast Canadian dockworkers went on strike July 1st, with a tentative agreement reached July 13, 2023. Approximately 20% of U.S. trade arrives via the Canadian ports of Vancouver and Prince Rupert. 15% of Vancouver’s freight and 60% of Prince Ruperts’ freight moves by rail to the U.S. There was a 46% drop in freight rail traffic from Canada to the U.S. during the past two weeks as ships were diverted to the U.S. Wages have been a key source of contention with the Union saying that wages have not kept up with inflation. Canada’s Minister of Labor intervened in labor negotiations. The government advised there was insufficient reason to strike and asked a mediator to recommend a settlement.

Now, the latest strike to potentially cripple the logistics industry is UPS vs. the Teamsters.

The strike is set to begin on August 1st. UPS employs approximately 500,000 people nationwide. The Teamsters represents roughly 70% of the workforce. So, how bad would a strike be? UPS estimates that they move 6% of U.S. GDP daily. CNN suggested that a 10-day UPS strike would cost the U.S. economy $7.1 billion. The reasons for a potential strike are many. The union argues that UPS workers are not fairly paid.

Last year, UPS posted a nearly $14 billion profit, and the union is demanding workers get their fair share, especially after the risks involved with working during the pandemic. Some issues have been resolved like air conditioning in new vehicles and the end of a “two-tier wage” system that paid part-timers a lower hourly wage than full time staff. The remaining issues are the pay and benefits for part-time UPS union members, which are actually a majority of the unionized staff. The union is arguing that part-timers receive lower wages and do not receive benefits until after nine months on the job.

In conclusion, we are finding similar issues cropping up across the logistics industry.

For white-collar workers, you don’t need a brash union like the dockworkers, fighting against automation, to know that with the rise of ChatGPT and open AI that new technology developments could eliminate your position at your organization. Quality-of-life issues at the various carriers across the industry are a cause of concern, as it causes undue stress on workers and their families. A lack of perceived fairness is also pervasive throughout the industry. In Los Angeles, container drayage companies could not make enough turns at the port to pay their fixed costs while the terminals and major carriers are announcing record profits. As an industry, we need to be aware of the issues that agitate and separate us. Finally, we need to work together to bring resolution to these problems, stop them from festering and bring them into the light so that they can be dealt with fairly for everyone.