West Coast dockworkers reached an agreement with port operators last week, ending one labor dispute, as UPS Teamsters voted to authorize a strike, heating up the next potential supply chain disruption.

Dockworkers at West Coast ports, which handle most of the incoming consumer goods from Asian manufacturers, including games, comics, books, and merch, have been working without a contract since July 2022.  After the dockworkers escalated their tactics by slowing freight handling earlier this month (see "Labor Action Shuts Down West Coast Port Terminals"), an agreement on a potential new contract, which must still be ratified by International Longshore and Warehouse Union workers and Pacific Maritime Association members, was reached last week.

The agreement provides for a 32% pay increase through 2028 and a one-time "hero bonus" for working through the pandemic, according to the Wall Street Journal.  The contract will cover over 22,000 workers.

Congestion at West Coast ports during the pandemic demonstrated the crucial role the sea freight gateways to the U.S. play in keeping retailers stocked.  The new labor agreement ensures that labor disputes are unlikely to be a cause of disruption in the coming years.

Meanwhile, negotiations between UPS and the International Brotherhood of Teamsters on a new contract to replace the one that expires at the end of July have been ongoing since April.  The authorization for the union to call a strike if negotiations are not successful passed with 97% of the vote, according to the New York Times.  Key issues are pay increases and a pay disparity for weekend drivers.

UPS handles about 25% of the parcels shipped in the U.S., and other carriers have insufficient capacity to handle the UPS volume if the company’s workers go on strike, according to the report.