Aug. 28 (Bloomberg) -- Unionized dockworkers and shippers reached a tentative agreement on health-care expenses during contract talks, reducing the threat of a strike that could cripple shipping on the U.S. West Coast.
The International Longshore and Warehouse Union, with 20,000 dockworkers on the Pacific Coast, and their employers, represented by the Pacific Maritime Association, announced the provisional deal late Aug. 26 in a joint statement. Terms weren’t disclosed.
Longshoremen have been working without a contract since a six-year pact expired July 1. Both sides said a key point in negotiations was how to divide the cost of the Affordable Care Act’s tax on generous health benefits. Dockworkers, retirees and their families get fully paid health care valued at more than $40,000 per employee, according to the maritime association.
“Health benefits was one item which could have been used to derail the negotiations,” said Peter Hall, an associate professor at Simon Fraser University in Vancouver, who specializes in trade economics. “I think it also suggests that the parties are wanting to send the message that they will reach an agreement.”
Craig Merrilees, a spokesman for the union, and Wade Gates, spokesman for the maritime association, both declined to comment on the tentative agreement or its significance to negotiations toward a new contract.
A strike would shut down 29 seaports from San Diego to Bellingham, Washington, at a cost to the U.S. economy of $2.1 billion per day, according to a June report by the National Association of Manufacturers and the National Retail Federation.
Some shippers have been diverting cargo to ports outside the U.S. such as Prince Rupert in British Columbia, said Jonathan Gold, vice president of supply chain and customs policy for the retailers group.
“Retailers, manufacturers, farmers and others who rely on the ports will continue with their contingency plans to ensure they are able to get their goods to market for the consumer, either here or abroad,” Gold said by e-mail.
The Obama administration’s health care plan imposes a 40 percent excise tax on health insurance plans exceeding $10,200 in benefits for individuals and $27,500 for families, indexed for inflation, starting in 2018.