ILA, USMX report progress is made on labor deal negotiations
July 23, 2012
Officials from the International Longshoremen’s Association, the largest union of maritime workers in North America, and the United States Maritime Alliance, an alliance of container carriers, direct employers, and port associations serving United States-based East and Gulf Coasts, recently reported progress is being made on negotiations for a new labor contract during meetings last week in Delray Beach, Florida.
As recently reported by LM, in recent months, the talks have ranged from amicable to contentious, which has led to shippers thinking about making contingency plans to move freight that typically arrives through East and Gulf Coast ports.
Both the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) have expressed their concerns to the ILA and USMX over what a potential labor strike could do.
In a joint statement, the ILA and USMX 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.
“We had a productive session in Florida,” ILA president Harold J. Daggett and USMX chairman and CEO James A. Capo said in a joint statement. “We’re pleased that we were able to resolve some important issues and look forward to continuing bargaining to reach agreement on the remaining issues in the current negotiations. The East and Gulf Coasts ports are crucial to the health of the nation’s economy and we take seriously our responsibility to reach an agreement without any disruption in the supply chain and operation of the 14 ports.”
While the final outcome of these negotiations is incomplete, ILA officials noted in March that since 1977 ILA and USMX have successfully negotiated nine new Master Contracts without any disruption in operations, with the current contract in effect since 2004 and then subsequently extended for two years in 2010.
But concerns remain heightened, due to the ten-day 2002 longshore contract dispute on the West Coast, which some estimates indicate cost the U.S. economy several billion dollars per day and negatively impacted various key sectors within the economy.
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 the ILA’s Daggett said in a letter to USMX’ 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.
And Capo also explained that the possibility of chassis pool operators joining USMX and be bound to the Master Contract, as per the ILA’s request, would be “impossible” to achieve as the USMX cannot legally force pool operations to do so.
The ILA is also requesting that all import containers be weighed at the pier before being released to assure that ILA funds are not shortchanged monies and help to save lives as the ILA has lost 14 members in the last year due to workplace fatalities. While the ILA admitted this would reduce port productivity it stressed that productivity can never trump safety. USMX contends that weighing containers would create more unneeded work, add unnecessary expense and increase congestion at the ports.
A noted ocean cargo expert said how significant an impact a potential disruption will be depends on its duration but may not be as dire as it could be.
“There are also limits to contingency plans and mitigation,” said Paul Bingham, economics practice leader at CDM Smith. “At some point the cost of obtaining alternative transportation (i.e. West Coast or air freight) or stocking inventories outweighs the profits lost from just waiting out a disruption. Profits lost come from lost sales and depreciated product value (e.g. perishables.) Yet one needs to be careful to not over-value disruption impacts. The ships that are delayed in the case of a disruption aren’t sunk, they are diverted or delayed at sea, with most of those cargoes eventually getting to their intended recipients. There is also the working off of pent up demand after a port disruption where some of the intially-disrupted sales are made up, just with a lag.”
Bingham said that the costs of assuring import capacity on alternative routes, such as across the West Coast ports, or advance stocking of inventory can be thought of as disruption insurance premiums.
And Ted Prince, principal consultant at T. Prince and Associates LLC and a partner at Surface Intermodal Solutions, said that there is nothing preventing the ILA and USMX from reaching a deal.
“The question is if the ILA is really trying to make a statement here,” he said. “There has been so much talk about the death of organized labor politically and generically. This is a labor union with a very proud history.”
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