Following months of acrimonious negotiations, 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, have reached a tentative agreement on a new labor contract.
News of this accord came from the United States Federal Mediation and Conciliation Service (FMCS), whom has been at the bargaining table with ILA and USMX to help them get a deal done since last September.
“I am extremely pleased to announce that the parties have reached a tentative agreement for a comprehensive successor Master Agreement,” FMCS Director George H. Cohen said in a statement. “The tentative agreement is subject to the ratification procedures of both parties and, as well, to agreements being achieved in a number of local union negotiations. Those local negotiations are ongoing and will continue without interruption to any port operation. Out of respect for the parties’ ratification processes, and consistent with the Agency’s long-standing confidentiality policy, we will not disclose any details concerning the substantive provisions that have been reached.”
While details of the agreement were limited, Cohen said that the tentative agreement reflects the culmination of good faith negotiations in which the parties successfully accommodated strongly held competing positions because of their commitment to problem solving, adding that collective bargaining has proven its worth by avoiding a potential work stoppage that would have had a severe negative impact on the nation’s economy. He also lauded ILA President Harold Daggett and USMX Chairman and CEO James Capo for their leadership, patience, and persistence and to their respective hard-working negotiating committees.
This tentative agreement comes in slightly ahead of the February 6 deadline, with the original deadline of September 30 pushed to December 29 and then to this 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.
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 have remained 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.
The National Retail Federation (NRF) expressed relief that the makings of a deal are in place. NRF Vice President, Supply Chain, Jonathan Gold told LM that this is very positive news for retailers and their supply chain operations.
“We are pleased to hear the FMCS announce the tentative agreement between the ILA and USMX,” said Gold. “We encourage them to quickly conclude the local negotiations and ratify the new contract. The new contract will bring certainty back to the supply chain and provide relief to the nation’s retailers, manufacturers, farmers and others who have been dealing with the continuing threat of a port shutdown.”
And NRF President and CEO Matthew Shay said that he is pleased the ILA and USMX have reached a tentative, long-term master contract, explaining that NRF urges the parties to quickly complete any outstanding negotiations, including local negotiations at each of the individual 14 ports, and quickly ratify the new labor agreement.
“If the tentative agreement holds, the new labor contract will bring much-needed certainty and predictability to the supply chain,” said Shay. “The new port labor contract, which covers container operations the each of the 14 East and Gulf Coast ports, from Maine to Texas, will help make these major ports more competitive and efficient.”
NRF’s Gold wrote in a blog posting last week that it was 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. If this happened on the East and Gulf Coast, Gold speculated that the impact could be far steeper as the 14 impacted ports account for about 45 percent of total U.S. trade.
“I know ILA members will be satisfied with the results of our negotiating efforts thus far,” said ILA President Harold J. Daggett in a statement. “Although the two sides cannot release complete details of this still unfinished contract, I can assure my membership that the protections for our jurisdiction and increased benefits and wages were achieved. We have come away from these Master Contract negotiations with landmark agreements on automation, protection of chassis work and powerful jurisdiction language.”
Daggett said he knows his membership is anxious to hear details of the tentative Master Contract agreement, but will wait until the full contract package—both Master and Local agreements—are available for ILA members to review and approve, while local negotiations are still ongoing and will continue without interruption to any port area.