It is getting late early for ILA-USMX talks…again

Chances are, if you are a baseball fan, or not, you have heard of Yogi Berra. Aside from being a part of ten World Series winning teams with the New York Yankees, Berra has been almost as well known for his classic sayings, also known as “Yogi-isms.”

Well, one of these so-called Yogi-isms comes to mind, especially lately, when thinking about the ongoing labor contract negotiations between the United States Maritime Alliance (USMX), an alliance of container carriers, direct employers, and port associations serving United States-based East and Gulf Coasts, and the International Longshoremen’s Association (ILA), the largest union of maritime workers in North America.

Which one, you ask? This one: “it is getting late early.”

While Yogi may not be involved with this, it basically perfectly sums up the current situation, with the clock ticking on the most recent extension that expires next week on February 6. The original deadline was September 30, 2012 but was extended to December 29, 2012, before being extended again to next week.

These negotiations are very significant in that they affect 14 East and Gulf Coast ports that cumulatively represent 95 percent of all containerized shipments—and 110 million tons of import and export cargo—to the Eastern seaboard.

While the final outcome of these negotiations remains 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.

And shippers have been cautious and careful about planning for the unknown when assessing how these negotiations could impact their supply chain operations.

A Northeast-based shipper told LM last year 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].”

On many fronts, this has become a very difficult situation for various supply chain stakeholder. That goes without saying, really.

In fact, both sides have met repeatedly with the U.S. Federal Mediation and Conciliation Service. While there are reports suggesting those meetings have been productive, actual details of progress being made are, shall we say, limited.

Hopefully, when February 6 comes next week, there is an announcement stating that some sort of deal has been reached.

National Retail Federation Vice President, Supply Chain, Jon Gold is also of that school of thought.

In a blog posting this week, Gold wrote that “it is now time for the parties to reach a new deal in order to bring much-needed stability and predictability to operations along and East and Gulf Coast ports.”

Gold explained that the current situation with the continued threat of a coast-wide port shutdown has wreaked havoc on the supply chain for the past year for the nation’s retailers, manufacturers, farmers, importers, exporters, and others who rely on the ports to move commerce. These groups, he explained, have had to continuously prepare for a supply chain disruption and have implemented costly contingency plans to ensure their products reach market, be it cars on the showroom floor or shirts on the store shelf, adding that these emergency protocols to reroute goods and merchandise continue to come at significant costs to U.S. businesses, which invariably impacts American consumers.

What’s more, he noted that any type of port disruption significantly impacts America’s stature in the global marketplace as was the case with the 2002 West Coast port strike which lasted for ten days and costs the U.S. economy roughly $1 billion per day and took more than six months to recover from. Should this happen on the East and Gulf Coast, Gold speculated that the impact could be far more steep as the 14 impacted ports account for about 45 percent of total U.S. trade.

“The only way the two sides can reach a deal is if they remain at the table,” wrote Gold. “Under no circumstance should the ILA and the USMX leave the negotiations until a final, long-term contact is reached and plans for quick ratification are approved. Hopefully it doesn’t come to that, but we all need to be prepared if another coast-wide port strike can’t be averted.”

When Yogi Berra played baseball, his career hitting statistics suggest he was not one to take his eye off of the ball when trying to help the Yankees score. Here is to hoping that the ILA and USMX use that same approach at the plate to provide a winning outcome for both teams.