Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The first dockworker strike on the US East Coast since
Speaker 2: nineteen seventy seven. It began early today after an eleventh
Speaker 2: hour boost in the employer's wage offer came up short.
Speaker 2: Union members hit the picket lines after midnight, container terminals
Speaker 2: closed in Carol Autoshipment's ground to a halt.
Speaker 3: Yeah. Absolutely. Gin Soroka knows firsthand about contract negotiations involving
Speaker 3: DOC workers. He dealt with prolonged negotiations and delays and
Speaker 3: slowdowns in the movement of goods along the West Coast
Speaker 3: ports that finally resulted in a new contract just about
Speaker 3: a year ago. Gene is the executive director of Port
Speaker 3: of Los Angeles and joins us from La Gene, good
Speaker 3: to have you here on what is turning out to
Speaker 3: be a very very busy day. First up, I am
Speaker 3: curious in terms of I guess I almost want to
Speaker 3: ask you about the Middle East, because it is one
Speaker 3: of those big things when we wrapped up the trading
Speaker 3: year about a year ago that when we talk about
Speaker 3: risks to the world, the investment, environment, geopolitics came up.
Speaker 3: Before we get into the East Coast strike, I would
Speaker 3: love for you to weigh in on what is happening
Speaker 3: in the Middle East and if at all you see
Speaker 3: any impact or concerns about maybe the outlook of your world.
Speaker 1: Good afternoon, Carolyn, tim and You're exactly right. There are
Speaker 1: a lot of geopolitical influences on supply chain decision makers
Speaker 1: and have been for some time. Looking at the Middle
Speaker 1: East today, cargo ships are still re routing around the
Speaker 1: Cape of Good Hope in Africa, avoiding the Red Sea
Speaker 1: with the hoothy Rebels. Suez Canal receipts are down eighty
Speaker 1: to ninety percent, and there's no less than four ongoing conflicts.
Speaker 1: This causes great concern for the certainty of the supply
Speaker 1: chain and how you have to do reroutes and workarounds
Speaker 1: to keep commerce flowing. But our thoughts and minds and
Speaker 1: hearts are with the people on the ground, so I'm
Speaker 1: sure families are safe.
Speaker 3: So layer on top of that, and then the strike
Speaker 3: that we're now seeing on the East coast port obviously
Speaker 3: not ideal for many many different reasons. Are you seeing,
Speaker 3: first of all, increased traffic on the west coast ports
Speaker 3: your port in particular because of what's happening here on
Speaker 3: the East Coast.
Speaker 1: Yes, Carol, we started to see an uptick in cargo
Speaker 1: volume at the beginning of the year. People were a
Speaker 1: little bit concerned, not only about a protracted dock workers negotiation,
Speaker 1: but drought conditions in the Panama Canal in addition to
Speaker 1: those security concerns in the Red Sea. Our cargo volume
Speaker 1: is up seventeen percent year to date, and we've had
Speaker 1: a very long peak season that began in June and
Speaker 1: still continues with some steam here now going into October.
Speaker 1: In fact, our third quarter ending yesterday is our best
Speaker 1: on record in one hundred and sixteen years.
Speaker 2: Do you see that continuing into the fourth quarter, which
Speaker 2: starts today.
Speaker 1: Typically the month of October is met with the Golden
Speaker 1: Week holiday in China formerly called National Day. We've got
Speaker 1: enough cargo still there at the major ports China to
Speaker 1: profile our vessels. Next week October will be strong that
Speaker 1: we might see a tapering off a little bit of
Speaker 1: the cargo volume, and that's seasonal, no more, no less.
Speaker 1: We're only in day one of this dock workers strike
Speaker 1: on the East Coast. No impacts on the ground that
Speaker 1: we see today, but the next forty eight to seventy
Speaker 1: two hours will be crucial.
Speaker 2: How do you expect gene dock workers on the West
Speaker 2: coast in West coast ports to stand in solidarity with
Speaker 2: their counterparts on the East coast. Will they refuse to
Speaker 2: unload freight diverted from East coast ports.
Speaker 1: We have not had any ships that are designated for
Speaker 1: East or Gulf Coast ports make a left hand turn
Speaker 1: and come into Los Angeles. And we're watching that very
Speaker 1: closely because my experience says that that is sacrisanct between
Speaker 1: these two working unions. One will not take advantage of
Speaker 1: another's bargaining position and move ships around. What you have
Speaker 1: seen are cargo owners that try to hedge against occurrences
Speaker 1: like this and maybe put a little bit more of
Speaker 1: their allocation towards West Coast ports, including Los Angeles and
Speaker 1: Long Beach than otherwise would have gone to the East coast.
Speaker 1: We also saw that last year as our negotiations with
Speaker 1: the dock workers here with the ISLWU went a little
Speaker 1: bit longer than some experts expected, and we saw some
Speaker 1: of our discretionary cargo that which goes to the middle
Speaker 1: part of the country move to those eastern ports.
Speaker 3: Yeah, I will point out that estimates from the National
Speaker 3: Association Manufacturers show that the strike jeopardizes two point one
Speaker 3: billion dollars in trade daily and the total economic damage
Speaker 3: could reduce GDP by as much as five billion dollars
Speaker 3: a day. So that's one statistics statistic. I should say
Speaker 3: that we are certainly reporting out Geane. Having said that,
Speaker 3: I think there it's fair to say that there are
Speaker 3: a lot of folks may be listening who have no
Speaker 3: idea what a dock worker makes, what dock worker gets
Speaker 3: in terms of benefits, what a dock worker is probably
Speaker 3: fighting for. What can you tell us about that front?
Speaker 1: These are well paid maid six figure jobs, but it's
Speaker 1: a skill set that's shared by few. The training and
Speaker 1: education that goes into these folks curricula to manage these
Speaker 1: big pieces of industrial equipment to move off all this
Speaker 1: cargo very few and far between, and the American workforce.
Speaker 1: These jobs are good for the middle class. In some cases,
Speaker 1: they're generational. Port Cities like ours here in Los Angeles,
Speaker 1: around the enclaves of San Pedro and Wilmington are built
Speaker 1: around these dock workers and families for generations. The economic
Speaker 1: landscape globally and in our shipping industry has changed dramatically
Speaker 1: since COVID. The last time that this dock workers group,
Speaker 1: the ISLA negotiated it was back in twenty nineteen, before
Speaker 1: all these changes took place. The union is saying they
Speaker 1: need to keep up with the growing economic influence of
Speaker 1: the shipping lines and the profits that they've earned.
Speaker 2: Ginis Carol mentioned you dealt with prolonged negotiations and delays
Speaker 2: and slowdowns and the movements of goods along the West
Speaker 2: Coast ports that finally resulted in a new contract that
Speaker 2: was about a year ago. Given that, what would your
Speaker 2: advice be to your counterparts at East Coast Ports who
Speaker 2: are going through the strike right now?
Speaker 1: A good question, Tim, Just keep everybody moving forward. There's
Speaker 1: a lot that's always said during negotiations. You know, blood
Speaker 1: pressure goes up, folks get a little bit hot under
Speaker 1: the collar. But keep people at the table negotiating on
Speaker 1: these salient points. In this case it's wage, automation or
Speaker 1: robotics and the other work rules that are necessary. If
Speaker 1: we're apart, nothing gets done. If you're at the table,
Speaker 1: we could start chipping away at these issues. And the
Speaker 1: ports are typically seen as the convener, and I know
Speaker 1: that the White House is working diligently across several agencies
Speaker 1: to make sure these talks can continue with shuttle diplomacy
Speaker 1: and just keeping chipping away at these issues. But as
Speaker 1: that natural and the good negotiators that they are, these
Speaker 1: ports can play a pivotal role in getting to a conclusion.
Speaker 3: What's the smart conversation around automation? Are our Bloomberg technology team.
Speaker 3: I was listening to them earlier talk about the subject,
Speaker 3: and you know, you just have the natural progression of
Speaker 3: technology taking over tasks that we all used to do
Speaker 3: by hand or that you needed a human to do it.
Speaker 3: We know that that just continues, especially in the past
Speaker 3: year and a half. We talk so much about generative AI,
Speaker 3: so many different things that are changing our world that
Speaker 3: now have been taken over by technology. So what is
Speaker 3: the smart conversation around that? When you've got businesses that
Speaker 3: are potentially publicly held companies that are thinking about costs
Speaker 3: and automation perhaps saves on that aspect. What's the responsibility
Speaker 3: of companies versus, you know, towards their shareholders versus perhaps
Speaker 3: their workers.
Speaker 1: Great question, Carolyn, It's the most polarizing conversation in our industry.
Speaker 1: But two thoughts. One our belief here and lost angelus
Speaker 1: is that technology is never moving faster than it is today,
Speaker 1: but we cannot leave the worker behind. And secondly, when
Speaker 1: it comes to the automation negotiation between private sector interests
Speaker 1: and unionized labor, there are very few examples. Only five
Speaker 1: percent of the three hundred and sixty ports around the
Speaker 1: world that are observed have some assemblance of automation or
Speaker 1: robotics five percent. We're a little heavier here in southern
Speaker 1: California and honestly have seen mixed results, But there are
Speaker 1: examples where if we could peel back everything else, automation
Speaker 1: can create additional capacity at that marine terminal and port.
Speaker 1: We can also take a workforce and not have to
Speaker 1: just chop it down by eighty percent as we've seen
Speaker 1: in some cases. If we can keep that workforce stable,
Speaker 1: double or even go beyond two x capacity at these
Speaker 1: marine terminals, there may be a four Armila here that
Speaker 1: helps both sides tremendously. Now we'll get into the time
Speaker 1: and duration of return on investment. We'll look at the
Speaker 1: types of skills that are needed, whether it needs to
Speaker 1: be upskilled and reskilled for folks who have been around
Speaker 1: for a while, or getting the technology training in place
Speaker 1: for the next generation of worker. In my experience, it
Speaker 1: doesn't have to be a zero sum game. There's a
Speaker 1: skillful way to do this, and that's where I would
Speaker 1: be right now in these negotiations.
Speaker 3: All right, we are talking at Gin Seroka, executive director
Speaker 3: of the Port of Los Angeles. I'm Carol Master along
Speaker 3: with Tim Stenovek here live on Blueberg Business Week. Do
Speaker 3: you want to mention a headline crossing the Israel Police
Speaker 3: updating the number of dead in that Tel Aviv attack
Speaker 3: to six. So we continue to get some headlines following
Speaker 3: the launch of missiles ballistic missiles by Ron, but there
Speaker 3: was also another direct attack in the area in Tel Aviv,
Speaker 3: so we're starting to get some more details about some
Speaker 3: of the casualties in that.
Speaker 2: And yeah, that shooting, Yeah that was a shooting. Yeah, Gene,
Speaker 2: I want to go back to Gene Soroca joining us
Speaker 2: from a Los Angeles Gene economists are still trying to
Speaker 2: figure out how much damage to a supply chain this
Speaker 2: would do, what the economic cost would be. Estimates range
Speaker 2: from a billion dollars to five billion dollars a day,
Speaker 2: and delayed or lost activity as a result of this strike.
Speaker 2: As a result of these strikes, given your perch, given
Speaker 2: where you are, I'm wondering how long you think this
Speaker 2: strike will go on?
Speaker 1: Yeah, Tim, that's an estimate of the average amount of
Speaker 1: cargo value that goes through these ports on a daily basis.
Speaker 1: Not all of it is perishable in the most clear sense.
Speaker 1: If this strike is very short, couple three days, there's
Speaker 1: the ability to catch up on getting this commerce out
Speaker 1: to the interior of the country, to the consumer bases
Speaker 1: across the Eastern Seaboard very quickly. It's when it becomes
Speaker 1: a lot longer than just these several days that if
Speaker 1: it turns into weeks, we'll have a very different discussion
Speaker 1: right here on this show. The other piece to this
Speaker 1: is that this strike will impact someone somewhere guaranteed. So
Speaker 1: whether it truly is a fruit or vegetable that's coming
Speaker 1: up from Central America, or it's a specific product that
Speaker 1: has to be sold by a particular date that may
Speaker 1: go away forever, and it's the stock out for the retailer.
Speaker 1: It's the order that an individual put in that may
Speaker 1: not make it in time for their consumer. That's what
Speaker 1: goes away as well, but it's just not a flat
Speaker 1: number of five billion dollars a day that will be
Speaker 1: eliminated from the United States economy if we can get
Speaker 1: these sides to reach agreement in a decent amount of time.
Speaker 1: And I would say that putting up pickets across fourteen
Speaker 1: major ports will motivate some more than ever to get
Speaker 1: to the table.
Speaker 3: So I want to just go back to wages, and
Speaker 3: just got thirty seconds here. My understanding is the most
Speaker 3: recent offer from the United States Maritime Alliance was for
Speaker 3: a fifty percent fifty five zero wage increase the workers wanted.
Speaker 3: I think more like sixty eight percent. For forgive me
Speaker 3: if I've got that number wrong. It sounds like a lot,
Speaker 3: and I think if somebody hears that, it sounds like
Speaker 3: a lot. In just thirty seconds, is it that their
Speaker 3: pay was so low or is that a pretty aggressive request?
Speaker 3: And just quickly if you could.
Speaker 1: I think the pay was a little bit low in
Speaker 1: keeping up with the gigantic income level jumps that you've
Speaker 1: seen in the shipping industry. This is an affordable quotient,
Speaker 1: but there are details that have to be resolved.
Speaker 3: All right, so appreciate it all the time. You've given
Speaker 3: us on this Tuesday, Jean Soroka, thank you so much.
Speaker 3: Gene is executive director at the Port of Los Angeles,
Speaker 3: joining us again from the West Coast LA, specifically