FMCS says progress is being made in ILA-USMX labor negotiations

Productive appears to be the operative term in describing the status of often strained labor negotiations between the International Longshoremen’s Association (ILA), the largest union of maritime workers in North America, and the United States Maritime Alliance (USMX), an alliance of container carriers, direct employers, and port associations serving United States-based East and Gulf Coasts.

Following a September 20 announcement by United States Federal Mediation and Conciliation Service Director George H. Cohen saying progress had been made in September negotiations between the parties “on several important subjects,” which led to the ILA and USMX agreeing to extend the collective bargaining agreement, which was due to expire on September 30 for a ninety-day period through December 29, Cohen said yesterday that more positive steps towards reaching an agreement were made last week.

“I am pleased to announce that five days of productive negotiations between the parties concluded on Saturday and that negotiations will resume next week under the auspices of the Federal Mediation and Conciliation Service,” Cohen said in a statement. “Further, I wish to commend the parties for their hard work and commitment to this process. The parties are making good progress on a number of difficult issues at the full committee and subcommittee levels.”

In September, when the 90-day extension was first announced, Cohen said that in taking this step the parties emphasized that were are doing so “for the good of the country” to avoid any interruption in interstate commerce.

And he added that the extension will provide the parties an opportunity to focus on the “outstanding core issues in a deliberate manner apart from the pressure of an immediate deadline.” The negotiations on the Master Agreement will be conducted during the same time frame as negotiations for local agreements, and the negotiations will continue under the auspices of the FMCS, he said.

When negotiations between the ILA and USMX broke off in recent weeks, the FMCS stepped in on September 6 upon its request for ILA and USMX to resume negotiations under FMCS auspices during the week of September 17, 2012.

This 90-day extension comes at a time when shippers were coming up with contingency plans for supply chain operations as Peak Season activity begins to accelerate. The need for urgency in these talks was made clear by the National Retail Federation and the Retail Industry Leaders Association.

It is certain to be welcome news for shippers, especially retailers, whom require long lead times and precision inventory management to get store shelves stocked in a timely manner for holiday shopping season.

At the Council of Supply Chain Management Professionals Annual Conference in Atlanta earlier this month, shippers that move freight into East and Gulf Coast ports told LM they had contingency plans in place to re-route shipments through West coast ports and/or Canada to avoid extended transit times, increased supply chain expenses and scheduling inconveniences, too.

A Northeast-based shipper previously told LM that in anticipation of a possible strike her company had done an inventory review and arranged to bring in inbound inventory ahead of time, coupled with discussing alternate routes with the company’s freight forwarders.

That approach could be quite tenuous, though, she said, as many other shippers were taking similar steps.

“It is a tough situation,” said the shipper. “When you have lead times of 45 days in some cases, it can make it hard to plan inventory that far ahead in advance, especially when it became clear that this situation was not going to be quickly resolved. And there is not alternate sourcing in the U.S. [for our products].”

Dealing with long lead times, coupled with the pending September 30 deadline, created unchartered waters for shippers in this case. This was likely to lead to shippers considering some modal shifts—to air for partial quantities, for example—to better navigate the labor standstill and still could if further progress is not made by the new December 29 deadline.

Ben Hackett, president of maritime consultancy Hackett Associates said that the potential impact of an October 1 labor strike had relatively little impact on volumes for East and Gulf coast ports.

“The East Coast Peak Season appears to have moved up [from October] by at least a month,” said Hackett. “Some volume was shifted to the West coast ports but not all of it. Anecdotally, there was not a huge impact. If there was a strike, we think it would be short-lived as the U.S. federal government would have likely stepped in to address it.”
The back story: As previously reported, a major sticking point in the negotiations between the ILA and USMX has to do with how the ILA has to negotiate all Master Contract issues with the ILA Wage Scale Committee, which ILA President Harold Daggett said in an August letter to USMX Chairman and CEO James Capo is a democratically-elected committee that Capo has declined to address despite Daggett’s overtures to do so.

Another issue has to do with technology. USMX’ Capo maintains that the ILA is demanding that management guarantee a job for any worker even if new technologies eliminate a need for that position. Capo also noted that the current Collective Bargaining Agreement mandates that both sides negotiate over the impact new technology might have on the work force.

On August 22, negotiations between ILA and USMX dissolved, following July meetings, which ostensibly pointed to positive progress being made, when they announced agreements in principle on issues having to do with the introduction of new technology and automation and maintenance and repair of chassis within marine terminals and at off-pier facilities at the East and Gulf Coast ports.

And on August 31, the USMX turned down the ILA’s demand for a final offer
from USMX for consideration by the ILA’s Wage Scale Committee, saying it was unclear how the ILA can expect a final offer when USMX have been unable to engage in any comprehensive negotiations for a new contract, including economic issues.