Contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association took an unexpectedly positive turn late Wednesday when the two sides reached agreement on health benefits.

Last weekend, negotiations hit a low point when the ILWU walked out of the talks and refused to extend the former contract which had been set to expire on July 1. With no contract, the union made it clear it was free to engage in work slowdowns or stoppages.

West Coast ports are experiencing increasing congestion this week with the crush of peak-season cargo, but employers said they have seen no indication of work slowdowns by longshoremen.

The agreement that was reached at 8 p.m. Wednesday apparently satisfies a key demand of the union for full maintenance of benefits. For two months after contract negotiations began on May 13, the ILWU refused to discuss any other issue.

However, significant hurdles still must be cleared. The two sides are still far apart on the PMA's demand for greater flexibility to implement modern technology at marine terminals. Employers want to improve productivity and reduce the cost of cargo handling at West Coast ports.

Also unresolved is a demand by employers to restructure the 50-year-old arbitration system for handling day-to-day disputes on the waterfront. The union has refused to budge on that issue. In fact, the ILWU said it walked out of negotiations after PMA President Joseph Miniace insisted that union negotiators accept the PMA's proposal on the arbitration process without making any changes.

The ILWU and PMA had just reached a tentative agreement on benefits when Miniace allegedly refused to sign that agreement unless the union accepted the PMA's proposal on arbitration. Earlier this week, however, Miniace agreed to negotiate each contract issue separately, said ILWU spokesman Steve Stallone. That opened the door for Wednesday's agreement on the health benefits package, he said.

A PMA spokesman said employers have a different interpretation of why the union walked out of negotiations, but he confirmed that the PMA has since agreed to handle issues as separate bargaining points and not to link them. As tentative agreement is reached on one issue, it will be set aside and will become official when the entire contract is agreed to, the PMA spokesman said.

The two sides must also agree upon a wage package. The PMA proposed an increase of 17 percent over a five-year contract. The ILWU proposed an increase of more than 50 percent, and when the PMA rejected that proposal, the union submitted a new proposal that would increase wages even more. Longshoremen who worked 2,000 or more hours in 2001 earned an average of $106,883.

In past negotiations, the parties started far apart on their wage proposals but when other issues were resolved, they quickly reached agreement.

Shippers, carriers and truckers report more congestion than usual this week, especially in Los Angeles-Long Beach. Jack Suite, the PMA's contract administrator, said the union has not been engaging in slowdowns, though, so the union can not be blamed. The congestion occurred because the Labor Day holiday was a no-work day, and this caused cargo to back up on the docks. In fact, congestion had been building in late August as experienced longshoremen went on vacation during the last week of the summer school vacation. Employers were forced to hire more part-time workers, or casuals, than usual.

Also, this peak season is turning out to be even busier than most. Cargo is backing up in distribution warehouses, and that is forcing importers to leave inbound containers at the docks, which aggravates congestion even further. Also, some containers and chassis are being held longer than usual at inland warehouses, causing a shortage of chassis at the ports.

By Bill Mongelluzzo