Call it a boon for promo’s supply chain.

The International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) have reached a tentative agreement on a new contract for 22,000 unionized workers who labor at 29 pivotal ports on the U.S. West Coast.

Announced Wednesday, June 14, the deal still needs to be voted on and ratified by rank-and-file union members and given final approval by PMA, but it has the backing of leaders of both groups. Terms of the deal have not yet been released. ILWU represents workers and PMA employers.

“We are pleased to have reached an agreement that recognizes the heroic efforts and personal sacrifices of the ILWU workforce in keeping our ports operating” during COVID-19 and contract talks, said PMA President James McKenna and ILWU President Willie Adams in a joint statement. “We are also pleased to turn our full attention back to the operation of the West Coast Ports.”

Promo Reacts to the Deal

Word on a tentative agreement already has some sourcing pros in the promotional products industry and beyond breathing sighs of relief, as concern that a strike or other labor strife-related disruptions at the ports could snarl supply lines has been a constant throughout the 13 months of often-contentious talks between ILWA and PMA. The workers’ contract expired in July 2022, but talks began before that date.

“Having a contract in place is a big plus for our industry,” said Jeffrey Nanus, CEO of eco-friendly hard goods supplier AAA Innovations (asi/30023). “It takes the uncertainty out of the equation. Since ocean cargo transit times are back to pre-pandemic levels and there is ample container space availability, our supply chain should remain stable, barring further unforeseen events.”

Executives at SanMar (asi/84863), an Issaquah, WA-based apparel provider that’s promo’s largest supplier, heralded the tentative agreement as “great news” for the industry.

“When the contract gets ratified by the rank and file, it should remove the threat of an extended work stoppage at the ports for West Coast importers.” John Janson, SanMar

“The agreement will bring stability to the West Coast Ports and remove the cloud of uncertainty that has hung over the region for the last year,” said John Janson, SanMar’s vice president of global logistics. “When the contract gets ratified by the rank and file, it should remove the threat of an extended work stoppage at the ports for West Coast importers.”

Teresa Fang, vice president of supply chain at alphabroder (asi/34063), promo’s second largest supplier, says the timing of the deal is fortuitous as importers gear up for the traditionally heavy importing period that occurs in the third quarter. “It’s a good thing for promo and retailers that are prepping for the upcoming back-to-school, Halloween and Christmas shopping seasons,” Fang said.

Amid uncertainty and sporadic/temporary worker-driven efficiency slowdowns or stoppages at the ports, importers in the promo products market and other industries diverted at least some incoming cargo to ports on the East Coast and Gulf Coast.

Assuming the contract receives final approval, promo sourcing leaders see a shift of some of those product-packed containers to the West Coast again. Such a switch back could prove especially attractive for importers in the western third of the nation. The sister ports of Los Angeles/Long Beach have typically handled the highest volumes in the U.S.

“The contract,” said Janson, “will allow for many cargo owners to return diverted cargo from the East Coast back to the West.” Cheron Coleman, vice president of private brand development and global supply chain at alphabroder, provided a similar perspective. “Importers,” Coleman said, “that may have pivoted away from the West Coast ports to the East Coast now have options again – as well as shorter transportation lead times.”

Brokering the Deal

Earlier this year, PMA and ILWU reportedly made progress on key points of contention, such as automation at ports.

Still, continued consternation over wages and benefits ratcheted up tensions and in recent weeks port workers took actions that resulted in slowdowns and outright stoppages of certain operations at ports. The disruption was short-lived enough to not have significantly impacted promo supply lines, industry sourcing leaders have said.

So Far, Port Disruptions Aren’t Affecting Promo Supply Lines, Sourcing Leaders Say https://t.co/hvxg774udR

— Chris Ruvo (@ChrisR_ASI) June 7, 2023

Nonetheless, concern over the labor actions triggered alarms across industries in the U.S., and the Biden Administration became more deeply involved in contract talks. Acting U.S. Labor Secretary Julie Su stepped in and helped broker the deal – something both ILWU and PMA acknowledged.

“The tentative agreement delivers important stability for workers, for employers and for our country’s supply chain,” said Su in a statement. “This important milestone is welcome news to all.”

Gene Seroka, the executive director of the Port of Los Angeles, said the deal lays the groundwork for a return to efficient, normal operations. It "brings the stability and confidence that customers have been seeking,” Seroka said. “We look forward to collaborating with our partners in a renewed effort to bring back cargo.”

"The tentative agreement between the ILWU and the PMA brings the stability and confidence that customers have been seeking,” said Port of Los Angeles Executive Director Gene Seroka. “We’re grateful to Acting Secretary of Labor Julie Su,...(1/2) pic.twitter.com/LkaFuAtFKI

— Port of Los Angeles (@PortofLA) June 15, 2023

Ports are important to promo, as the majority of branded merch items sold in North America are manufactured in Asia and arrive by ship to these shores. During the COVID-19 era, vessel/cargo congestion and related operational clogs at domestic ports contributed to industry inventory shortages by slowing down the rate at which suppliers could replenish stock. While the backups and delays have largely abated, a West Coast port strike would reignite them.

Sourcing leaders have said that, while ample new and evolving challenges remain, the conditions that constituted promo’s pandemic-era supply chain crisis have ended.