One-day East Coast labor strike gets shippers’ attention

In supply chain and logistics circles, talk or the threat of a port labor-related strike is ostensibly never truly out of sight or mind.

That was especially true in late 2014 through the first quarter of 2015, with the high-profile dispute between the Pacific Maritime Association and the International Longshore & Warehouse Union, which resulted in severe port congestion and cargo backlogs, as well as still-high inventories.

While the PMA-ILWU dispute was settled last spring, a new port-related labor issue popped up on the East Coast last week, when a labor dispute on Friday, January 29 occurred when union members of the International Longshoremen Association (ILA), the largest union of maritime workers in North America, walked off the docks at the Port of New York and New Jersey, the largest East Coast port and second largest U.S. port.

The Wall Street Journal reported that the one-day strike was a unified action against the Waterfront Commission of New York Harbor, a bistate body that investigates corruption and regulates hiring practices among dockworkers, adding that longshoremen said the commission had interfered in hiring and the union’s collective bargaining agreement with the New York Shipping Association, and was “jeopardizing the future of the industry with this interference.”

Regardless of the cause or reason for the walkout, shippers are not pleased it happened, if even for one day, especially when the current contract between the ILA 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, does not expire until September 30, 2018.

And shippers made their position clear in a pointed letter written by National Retail Federation (NRF) President and CEO Matthew R. Shay to ILA President Harold Daggett and USMX Chairman and President David Adam.

In the letter Shay said that strikes like the one that recently occurred are exceptionally disruptive and create uncertainty among stakeholders. And while NRF is in favor of the parties’ decision to engage in early contract extension discussions, Shay said these are discussions that need to happen without disruptions to ports.

“Illegal labor actions that cause a complete shutdown of the largest port on the East Coast will not be tolerated by shippers,” wrote Shay. “Such disruptions send a very troublesome message to the port’s customers - the cargo owners. While there may be outstanding non-contract issues, electing to walk off the job in protest, even for a short period of time, only adds to ongoing congestion issues facing the port and its customers. The congestion issues impact thousands of companies and millions of workers who rely on efficient movement of goods, either imports or exports, through the nation’s ports.”

Shay also noted that port disruptions can do significant economic harm, as was the case with the West Coast port labor dispute on GDP, which also saw East and Gulf Coast ports subsequently increase market share. And he also observed that East Coast ports are in a position to up market share with the Panama Canal expansion, but that could be stymied if labor disruptions, or even the threat of them, were to force shippers’ hands and lead them to reevaluate supply chain options for cargo movements.

Shay’s comments made it clear that shippers cannot afford to deal with labor-related issues that stall port operations and directly impact their ability to successfully operate and meet and exceed customers’ needs.  

The good news for shippers, if there really is any, is that at this point they are well-versed in how to prepare for the unexpected.

For example, in 2013 just before the ILA and USMX reached a tentative labor agreement, shippers told us they had been cautious and careful about planning for the unknown when assessing how negotiations could impact their supply chain operations.

A Northeast-based shipper explained at the time that 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.

Similar practices focused on re-routing cargo from the West Coast to the East Coast ahead of the holiday season was commonplace last year, too.

Even though last week’s strike was only for one day, and it is clear it got shippers’ attention to say the least. Here is to hoping relations between ILA and USMX are smooth going forward with smooth sailing ahead.