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The first dockworker strike on the US East Coast since nineteen seventy seven. It began early today after an eleventh hour boost in the employer's wage offer came up short. Union members hit the picket lines after midnight, container terminals closed in Carol Autoshipment's ground to a halt.
Yeah. Absolutely. Gin Soroka knows firsthand about contract negotiations involving DOC workers. He dealt with prolonged negotiations and delays and slowdowns in the movement of goods along the West Coast ports that finally resulted in a new contract just about a year ago. Gene is the executive director of Port of Los Angeles and joins us from La Gene, good to have you here on what is turning out to
be a very very busy day. First up, I am curious in terms of I guess I almost want to ask you about the Middle East, because it is one of those big things when we wrapped up the trading year about a year ago that when we talk about risks to the world, the investment, environment, geopolitics came up. Before we get into the East Coast strike, I would love for you to weigh in on what is happening in the Middle East and if at all you see any impact or concerns about maybe the outlook of your world.
Good afternoon, Carolyn, tim and You're exactly right. There are a lot of geopolitical influences on supply chain decision makers and have been for some time. Looking at the Middle East today, cargo ships are still re routing around the Cape of Good Hope in Africa, avoiding the Red Sea with the hoothy Rebels. Suez Canal receipts are down eighty to ninety percent, and there's no less than four ongoing conflicts.
This causes great concern for the certainty of the supply chain and how you have to do reroutes and workarounds to keep commerce flowing. But our thoughts and minds and hearts are with the people on the ground, so I'm sure families are safe.
So layer on top of that, and then the strike that we're now seeing on the East coast port obviously not ideal for many many different reasons. Are you seeing, first of all, increased traffic on the west coast ports your port in particular because of what's happening here on the East Coast.
Yes, Carol, we started to see an uptick in cargo volume at the beginning of the year. People were a little bit concerned, not only about a protracted dock workers negotiation, but drought conditions in the Panama Canal in addition to those security concerns in the Red Sea. Our cargo volume is up seventeen percent year to date, and we've had a very long peak season that began in June and still continues with some steam here now going into October.
In fact, our third quarter ending yesterday is our best on record in one hundred and sixteen years.
Do you see that continuing into the fourth quarter, which starts today.
Typically the month of October is met with the Golden Week holiday in China formerly called National Day. We've got enough cargo still there at the major ports China to profile our vessels. Next week October will be strong that we might see a tapering off a little bit of the cargo volume, and that's seasonal, no more, no less. We're only in day one of this dock workers strike
on the East Coast. No impacts on the ground that we see today, but the next forty eight to seventy two hours will be crucial.
How do you expect gene dock workers on the West coast in West coast ports to stand in solidarity with their counterparts on the East coast. Will they refuse to unload freight diverted from East coast ports.
We have not had any ships that are designated for East or Gulf Coast ports make a left hand turn and come into Los Angeles. And we're watching that very closely because my experience says that that is sacrisanct between these two working unions. One will not take advantage of
another's bargaining position and move ships around. What you have seen are cargo owners that try to hedge against occurrences like this and maybe put a little bit more of their allocation towards West Coast ports, including Los Angeles and Long Beach than otherwise would have gone to the East coast.
We also saw that last year as our negotiations with the dock workers here with the ISLWU went a little bit longer than some experts expected, and we saw some of our discretionary cargo that which goes to the middle part of the country move to those eastern ports.
Yeah, I will point out that estimates from the National Association Manufacturers show that the strike jeopardizes two point one billion dollars in trade daily and the total economic damage could reduce GDP by as much as five billion dollars a day. So that's one statistics statistic. I should say
that we are certainly reporting out Geane. Having said that, I think there it's fair to say that there are a lot of folks may be listening who have no idea what a dock worker makes, what dock worker gets in terms of benefits, what a dock worker is probably fighting for. What can you tell us about that front?
These are well paid maid six figure jobs, but it's a skill set that's shared by few. The training and education that goes into these folks curricula to manage these big pieces of industrial equipment to move off all this cargo very few and far between, and the American workforce. These jobs are good for the middle class. In some cases, they're generational. Port Cities like ours here in Los Angeles, around the enclaves of San Pedro and Wilmington are built
around these dock workers and families for generations. The economic landscape globally and in our shipping industry has changed dramatically since COVID. The last time that this dock workers group, the ISLA negotiated it was back in twenty nineteen, before all these changes took place. The union is saying they need to keep up with the growing economic influence of the shipping lines and the profits that they've earned.
Ginis Carol mentioned you dealt with prolonged negotiations and delays and slowdowns and the movements of goods along the West Coast ports that finally resulted in a new contract that was about a year ago. Given that, what would your advice be to your counterparts at East Coast Ports who are going through the strike right now?
A good question, Tim, Just keep everybody moving forward. There's a lot that's always said during negotiations. You know, blood pressure goes up, folks get a little bit hot under the collar. But keep people at the table negotiating on these salient points. In this case it's wage, automation or robotics and the other work rules that are necessary. If we're apart, nothing gets done. If you're at the table,
we could start chipping away at these issues. And the ports are typically seen as the convener, and I know that the White House is working diligently across several agencies to make sure these talks can continue with shuttle diplomacy and just keeping chipping away at these issues. But as that natural and the good negotiators that they are, these ports can play a pivotal role in getting to a conclusion.
What's the smart conversation around automation? Are our Bloomberg technology team. I was listening to them earlier talk about the subject, and you know, you just have the natural progression of technology taking over tasks that we all used to do by hand or that you needed a human to do it. We know that that just continues, especially in the past year and a half. We talk so much about generative AI, so many different things that are changing our world that
now have been taken over by technology. So what is the smart conversation around that? When you've got businesses that are potentially publicly held companies that are thinking about costs and automation perhaps saves on that aspect. What's the responsibility of companies versus, you know, towards their shareholders versus perhaps their workers.
Great question, Carolyn, It's the most polarizing conversation in our industry. But two thoughts. One our belief here and lost angelus is that technology is never moving faster than it is today, but we cannot leave the worker behind. And secondly, when it comes to the automation negotiation between private sector interests
and unionized labor, there are very few examples. Only five percent of the three hundred and sixty ports around the world that are observed have some assemblance of automation or robotics five percent. We're a little heavier here in southern California and honestly have seen mixed results, But there are examples where if we could peel back everything else, automation can create additional capacity at that marine terminal and port.
We can also take a workforce and not have to just chop it down by eighty percent as we've seen in some cases. If we can keep that workforce stable, double or even go beyond two x capacity at these marine terminals, there may be a four Armila here that helps both sides tremendously. Now we'll get into the time
and duration of return on investment. We'll look at the types of skills that are needed, whether it needs to be upskilled and reskilled for folks who have been around for a while, or getting the technology training in place for the next generation of worker. In my experience, it doesn't have to be a zero sum game. There's a skillful way to do this, and that's where I would be right now in these negotiations.
All right, we are talking at Gin Seroka, executive director of the Port of Los Angeles. I'm Carol Master along with Tim Stenovek here live on Blueberg Business Week. Do you want to mention a headline crossing the Israel Police updating the number of dead in that Tel Aviv attack
to six. So we continue to get some headlines following the launch of missiles ballistic missiles by Ron, but there was also another direct attack in the area in Tel Aviv, so we're starting to get some more details about some of the casualties in that.
And yeah, that shooting, Yeah that was a shooting. Yeah, Gene, I want to go back to Gene Soroca joining us from a Los Angeles Gene economists are still trying to figure out how much damage to a supply chain this would do, what the economic cost would be. Estimates range from a billion dollars to five billion dollars a day, and delayed or lost activity as a result of this strike.
As a result of these strikes, given your perch, given where you are, I'm wondering how long you think this strike will go on?
Yeah, Tim, that's an estimate of the average amount of cargo value that goes through these ports on a daily basis. Not all of it is perishable in the most clear sense. If this strike is very short, couple three days, there's the ability to catch up on getting this commerce out to the interior of the country, to the consumer bases
across the Eastern Seaboard very quickly. It's when it becomes a lot longer than just these several days that if it turns into weeks, we'll have a very different discussion right here on this show. The other piece to this
is that this strike will impact someone somewhere guaranteed. So whether it truly is a fruit or vegetable that's coming up from Central America, or it's a specific product that has to be sold by a particular date that may go away forever, and it's the stock out for the retailer. It's the order that an individual put in that may
not make it in time for their consumer. That's what goes away as well, but it's just not a flat number of five billion dollars a day that will be eliminated from the United States economy if we can get these sides to reach agreement in a decent amount of time. And I would say that putting up pickets across fourteen major ports will motivate some more than ever to get to the table.
So I want to just go back to wages, and just got thirty seconds here. My understanding is the most recent offer from the United States Maritime Alliance was for a fifty percent fifty five zero wage increase the workers wanted. I think more like sixty eight percent. For forgive me if I've got that number wrong. It sounds like a lot, and I think if somebody hears that, it sounds like a lot. In just thirty seconds, is it that their pay was so low or is that a pretty aggressive request?
And just quickly if you could.
I think the pay was a little bit low in keeping up with the gigantic income level jumps that you've seen in the shipping industry. This is an affordable quotient, but there are details that have to be resolved.
All right, so appreciate it all the time. You've given us on this Tuesday, Jean Soroka, thank you so much. Gene is executive director at the Port of Los Angeles, joining us again from the West Coast LA, specifically