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Focus: Global Supply Chain and Logistics

Our Weekly Feature Article on Topics Related to Global SupplyChain Logistics

From SCDigest's On-Target e-Magazine

- Aug. 1, 2012 -

Global Logistics News: Labor Issues Cause Some Growing Concern for US Importers and Exporters

Progress Said to be Made in East and Gulf Coast Port Contracts, but Expiration Looms Soon; Clerical Workers Could Shut Down LA-Long Beach

SCDigest Editorial Staff

Shippers, port operators, politicians and others are growing increasingly concerned that union disputes could soon disrupt port operations on one or both US coasts.

The biggest news is the looming expiration Sept. 30 of the contract between dock workers in the International Longshoremen's Association (ILA) and ports on the East and Gulf coasts.

SCDigest Says:

Job security and other programs are huge issues, given the push for much more extensive use of container handling automation at most ports.

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In additional, a more obscure dispute at the ports of Los Angeles and Long Beach between the union representing clerical workers has the potential to slow down or even halt dock activities there at what is by far the nation's busiest port complex.

Both the ILA and the United States Maritime Alliance (USMX), which represents the terminal operators in the negotiations the same way that the Pacific Maritime Association does for West Coast ports, have been mostly mum on the status of the negotiations over a new contract. Those negotiations have been going on for more than two months.

With now less than two months until the contract expires and unclear clear signs of progress, some shipper interests are starting to get nervous.

The National Retail Association (NRF), whose members collectively import a tremendous amount of goods each year, last week sent a letter to both the union and the USMX urging quick resolution to the negotiations - and to keep working even if a deal isn't done by the end of September.

"Any kind of disruption at the ports would not only add costly delays to our members' supply chains and other industries relying on East and Gulf Coast maritime facilities, but potentially further threaten the fragile economic recovery as we enter the peak [holiday] shipping season," NRF President and CEO Matthew Shay said in a letter. "It is important to note that even the perceived risk of a disruption has already forced retailers and other shippers to re-evaluate their use of East and Gulf Coast ports."

Shay added that "We would further ask that you issue a statement committing to continue negotiating and working without interruption, even if negotiations extend beyond the September 30th contract expiration."

There is extra concern because the discussions initially got off to a contentious start.

In June, USMX Chairman James Capo said ILA president Harold Daggett "appears to be less than committed" to good-faith bargaining, while Daggett charged Capo with making "personal attacks against me" while avoiding the important economic issues at stake in the contract.

Daggett is insistent that any new contract provide additional job security for Longshoremen, including severance payments for laid off workers and re-training programs. This is a key issue, given the push for much more extensive use of container handling automation at most ports. Reports just a few weeks ago were that the two sides were for apart on these and other issues.

(Global Supply Chain Article Continued Below)

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However, two weeks ago, after another few days of negotiations, Daggett and Capo issued a joint statement that said "We had a productive session in Florida," and that "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."

No commitment to keep working past the Sept. 30 contract expiration has been made to date, however.

Potential Strike by Small Union at Ports of LA and Long Beach Could Lead to Shutdown

Meanwhile, the last contract between the Office Clerical Unit of International Longshore and Warehouse Union (IWLU), which represents West Coast port workers, expired more than two years ago for workers in LA and Long Beach. The clerical workers process documents related to imports and exports.

The two sides are said to be far apart, with a key issue remaining deep union concerns that the ports will send some of the processing work to other areas of the US or even off shore.

The risk to importers? That the union will set up a new picket line, which it did once before, and that other ILWU members will honor the picket line, dramatically curtailing port activity.

Shortly after the clerical workers did set up a picket line earlier this year, an arbitrator ruled the picket line wasn't justified and said that the bigger parts of the union had to continue to go to work. That ruling was later overturned by a higher ranking official known as the coast arbitrator, but the clerical workers have not put up another picket line - yet.

That could change though at almost any time. With no contact after more than two years, and the clerical workers still operating under the old contract, a strike/picket line would seem to be the union's logical course of action before too long.

We'll note the Los Angeles Times reported this week that the Pacific Maritime Association is saying that it has offered generous wage increases, a signing bonus and increased pension benefits to the clerical workers, and that the union is being intransigence.

But the union obviously is more concerned about the job security issue.

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