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June 23, 2014

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COMMENTARY THE JOURNAL OF COMMERCE 21 Jordan W. Cowman TIME TO TALK THE TALK M I L L I O N S — E V E N billions — of dollars. Each day. What could pos- sibly cost that much? Well, seaport strikes and labor disputes, to start. Although port labor strikes are anything but a recent phenom- enon, the recent pace of strikes is quickening in response to escalat- ing economic changes worldwide. A simple Internet browser search on "port strike" will yield such results as "Seaport strike costing U.S. econ- omy $1B a day"; "Chile is losing more than $200M a day due to port worker strike"; "Port Hedland (Australia) facing $100M a day strike threat." Labor strikes recently have hit ports in India, the U.S., Cyprus, Brazil, Egypt, Argentina, Hong Kong, Por- tugal and Australia. Why is this compelling? Because few things touch every national econ- omy more pervasively than seaports. Seaports are the international hubs for global commerce. Indeed, activity in ports has a material influence on the free flow of goods, and therefore the greater economy, throughout the supply chain. And seaports' impor- tance to the global economy will only increase in the future, experts agree. Studies and reports from author- itative sources such as the Organisa- tion for Economic Co-operation and Development, the JOC, the European Commission and others confirm that seaport cargo volumes will rise sig- nificantly over the next 20 years. Anticipating growth in seaport activity, public-private partnerships, governments and the private sector are investing in infrastructure to handle the additional workload. The Panama Canal expansion project is the most notable example, but large- scale port expansion, dredging and infrastructure undertakings are increasingly common. Carriers con- tinue to order larger ships, with some capable of carrying more than 18,000 20-foot-equivalent container units. Yet with all of this busy prepa- ration, one critical aspect of port success is being ignored at our peril: the relationship between seaport labor and its management. To meet the demands arising from the antici- pated growth, labor-management relations must adapt to the changing needs of seaports. If they don't, the port strike headlines of today will continue to proliferate in the future, with corresponding increases in human cost and financial loss. So, while all the building and dredging is in process, business, labor and government leaders should wake up to the moral and financial impera- tive that they should work together to address the pressing and unmet need for social dialogue in the port sector. Although our global economy continues to modernize with 21st century capacity, industrial relations in most of the world's ports are mired in adversarial frameworks and pro- cess of the 19th and 20th centuries. Ports must adjust not only their infrastructures but also their abil- ity to provide services in a labor environment that keeps pace with competitive pressures. Increasingly, ports compete against each other, because shippers have multiple op- tions of where to unload their cargo. As a result, labor unrest at a specific port, while causing significant local damage, might not lead to the kind of economic pressure it once did. Ports that maintain a reputation for unstable labor issues become less desirable in the shipping econ- omy, particularly where alternative ports are readily available. Bilateral, regional and multilateral trade agree- ments diminish the significance of political borders, which once served as the sole criterion of which port a shipper must use. Social dialogue, the process of consensus building among work- ers, employers and government, and the resulting improvements in labor-management relations, is rec- ognized widely as a key component of port competiveness by providing the stakeholders with effective tools to develop a stable, reliable workforce. But social dialogue is neither intuitive nor a naturally occurring exercise. Therefore, without sustained, targeted efforts to teach and foster effective social dialogue, the future of stable labor relations remains in question. Success in this area is cur- rently hit or miss. New policy spaces for social dialogue in the port sec- tor have opened, but have yet to be filled. Successful models of improved efficiency, dispute prevention and resolution remain largely unexplored. Emerging and important efforts are underway to improve labor relations in seaports. The Univer- sity of Texas at Dallas, for example, is undertaking groundbreaking research and meaningfully engaged in study and practice of social dia- logue in the port sector. UT Dallas is creating effective training mate- rials, innovative training methods and platforms for social dialogue outreach into the port sector. In addition, the European Commission, following research and analysis, last year took the unprecedented step of creating sector-specific legislation in this area. No government, business, union or nongovernmental organization can fiat meaningful change in sea- port industrial relations, but the coming increases in port business and their associated market pres - sures demand change nonetheless. Prepared or not, ports in the future will face a more dynamic competi- tive environment. Enhanced social dialogue in the port sector is some- thing every stakeholder — unions, employer organizations and govern- ments — can agree upon. JOC Jordan W. Cowman is a shareholder in the international law firm of Greenberg Traurig in Dallas. His practice focuses on international labor and employment law. He also is an adjunct professor of international business at the University of Texas at Dallas, where he leads a team engaged in research and practical solutions regarding social dialogue in seaports. Contact him at

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