U.S. port strike fears grow as ILA halts negotiations with USMX

Photo: ILA

Raising the specter of a labor dispute paralyzing container traffic at U.S. ports on the East and Gulf coasts, the International Longshoremen’s Association (ILA) on June 10 announced it had suspended talks with the United States Maritime Alliance (USMX) that had been scheduled for the next day. The decision arises amid ongoing negotiations of local agreements under a coast-wide master contract, set to expire on September 30, 2024.

The ILA said that it canceled master contract talks with the employers’ organization “after discovering that APM Terminals and Maersk Line are utilizing an Auto Gate system, which autonomously processes trucks without ILA labor. This system, initially identified at the Port of Mobile, Ala., is reportedly being used in other ports as well.”

In a statement released June 11, USMX said that it had met with the ILA for local contract negotiations over the last two weeks.

“As is typical in our discussions, some issues will require further conversation between the local parties,” it said, adding, “USMX looks forward to re-engaging with the ILA’s bargaining committee to jointly move local and master contract negotiations forward for the betterment of the USMX membership and the ILA rank-and-file.”

ILA comments were a tad less muted.

“Here we go again! This is another example of USMX members unilaterally circumventing our coast-wide Master Contract,” said a spokesman. “This is a clear violation of our agreement with USMX, and we will not tolerate it any longer.”

“There’s no point trying to negotiate a new agreement with USMX when one of its major companies continues to violate our current agreement with the sole aim of eliminating ILA jobs through automation,” said ILA international president Harold J. Daggett, who serves as chief negotiator for the union.

The ILA says that it will not meet with USMX until the Auto Gate issue is resolved. Additionally, the union is still waiting on results from an audit for the jobs created out of new technology, a report it has been anticipating for almost two contract periods. The ILA says that it has observed an increasing number of IT personnel on marine terminals and has concerns that APM and Maersk’s IT departments in Charlotte, North Carolina, are encroaching on their jurisdiction.

STRIKE ACTION?

How likely is strike action?

“There has never been a strike on the U.S. East Coast—it is usually the U.S. West Coast where union disagreements are more likely to result in action. But this time could be different,” says Peter Sand, chief analyst at Oslo-headquartered ocean and air freight rate benchmarking and market analytics platform Xeneta.

“The rhetoric from the ILA has been particularly strong and it is clear there is a depth of anger and frustration that has perhaps not been there in previous years,” Sand writes in a recent post on the Xeneta blog. “The existing labor contract will expire on September 30, and we should expect unio action as the situation heats up. Timing is everything when you’re negotiating and the announcement by the ILA could not have come at a worse time for shippers.

“What impact could this have on the market?

“In isolation, ocean supply chains would probably be able to cope with union action on the U.S. East and Gulf coasts.

“However, this is happening at a time when the majority of carriers continue to avoid the Red Sea region, there is severe port congestion in the Mediterranean and Asia, there are equipment shortages, shippers are frontloading imports ahead of the Q3 peak season and there are still restrictions in the Panama Canal (albeit these restrictions are reducing).

“There is also disruption at Port Charleston due to construction work at Wanda Welch terminal, which could last up to a year and has seen wait time for all vessels increasing to six days.

“This toxic cocktail of factors has seen spot rates soar on the world’s major trades and the threat of union strikes will do nothing to ease this upward pressure. Even ‘work by the rules’ union action will bring down the efficiency of U.S. East Coast ports and cause problems for shippers.”

Much more on the options for shippers in Peter Sand’s post. He concludes:

“You can sit back and hope for the best – and perhaps there will be a resolution to the dispute between the ILA and USMX—but the smart shippers with robust forward-planning and risk management are already constantly monitoring and analyzing the data so they can make the better decisions, at the right time.

U.S. CONTAINER IMPORTS BOOMING

News of the breakdown in ILA-USMX negotiations came as the National Retail Association and Hackett Associates released a new Global Port Tracker report that indicates that monthly inbound cargo volume at major U.S. container ports is expected to reach its highest level in nearly two years this summer.

“Consumers are continuing to spend more than last year, and retailers are stocking up to meet demand, especially as we head into peak shipping season,” NRF vice president for supply chain and customs policy Jonathan Gold said. “The high level of imports expected over the next several months is an encouraging sign that retailers are confident in strong sales throughout the remainder of the year. Unfortunately, retailers are also facing supply chain challenges again, this time with congestion at overseas ports that are affecting operations and shipping rates.”

Hackett Associates founder Ben Hackett said an expected seven-month string of import levels above 2 million TEU—a level reached only twice since October 2022—is partly due to changes in the annual “peak season” for shipping.

“Imports of containerized goods at U.S. ports are booming, with particularly strong growth on the West Coast,” Hackett said. “In the last couple of years, we have witnessed a flattened peak season that has stretched out the volume of imports over extra months versus the strong, consolidated surge seen in the past. Reasons range from retailers restocking following strong sales after the pandemic to trying to get ahead of increased tariffs on goods from China set to take effect in August and ensuring sufficient inventories for the holiday season amid strong consumer demand.”