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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. 28, 2012 -

Global Logistics News: Talks Between Longshoremen's Union and East-Gulf Cost Ports Collapsed Quickly Last Week, as Potential Strike and Port Disruptions are Just Weeks Away

Strike Now Likely, ILA President Says; Contingency Plans for Importers, Ports

SCDigest Editorial Staff

With a Sept. 30 contract expiration now just weeks away, prospects of a strike by the International Longshoremen's Association (ILA) against 14 East Coast and Gulf ports represented by the United States Maritime Alliance (for some reason abbreviated as USMX) went nowhere last week, with reports that discussions broke down in just 20 minutes.

SCDigest Says:

The ILA is also said to be resisting any changes to work rules at the ports, most of which date back to the union's "On the Waterfront" era.

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That led the ILA's president to now say that a strike is likely. Whether that is mostly posturing or a real threat is the multi-billion question.

The major issues are not surprising and important ones: the ports want to add to their level of automation, while the ILA wants more protections for workers in terms of job security and support programs for any Longshoremen who do lose jobs due to automation.

The negotiations have to date been a bit unusual, even for the usually tense contract discussions with Longshoremen historically.

It started with some name calling in June, when 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 contracts. Insiders around this time were saying the gap in positions on key issues were very large.

However, in mid-July 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."

Now several sources said that the next round of talks which began last week broke down in less than half an hour. That led to cancelation of three days of scheduled negotiations after the union rejected USMX's request to discuss proposals for changes to work rules at the ports.

James Capo later said that the ILA was taking positions "contrary to the history of cooperation that has characterized these negotiations in the past."

The ILA is also said to be resisting any changes to work rules at the ports, most of which date back to the union's "On the Waterfront" era, which many industry and port regulators view as corrupt and inefficient.

(Global Supply Chain Article Continued Below)

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Capo said employers wanted to address "archaic practices" that are still in place, among them, the "low-show" jobs that pay some ILA members for 24 hours of work even if they are only on the job for a few hours a day.

The real possibility of a strike and port disruptions is starting to make more and more shippers and importers very nervous. Earlier, the National Retail Federation had sent letters to both the ILA and USMX urging a rapid agreement be reached - and that the ILA keep working past Sept. 30 in the case where a new contract has not been agreed upon.

There was naturally enough no response from the ILA to this request.

On Monday, the NRF issued a statement from its president Mathew Shay that said "We understand and recognize that there are tough issues that need to be resolved. The issues will only be resolved, however, by agreeing to stay at the negotiating table until a final deal is reached. Failure to reach agreement will lead to supply chain disruptions which could seriously harm the U.S. economy."

Most large importers have contingency plans, and several freight forwarders have been telling clients to accelerate deliveries to before Sept. 30 or make plans to use other ports that would not be affected by a strike.

However, importers looking to move freight to West Coast ports might run into some troubles there as well.

In May, Bob McEllrath, president of the IWLU union that represents West Coast port workers, stated that dock workers there would stand in solidarity with their East Coast brethren when it comes to protecting job jurisdiction as employers introduce new automated cargo-handling equipment.

"No one should listen to the recent hum of industry executives suggesting they know what dockworkers on the West Coast will or won't do in support of our East Coast brothers and sisters," he said in a press release then. "The fact is that we have their back in the fight to protect work and jurisdiction. Their fight is our fight."

The ports themselves also have contingency plans (management as labor, temporary employees, etc.), but as NRF's Shay noted, "These plans carry great expense, but they are necessary to avoid disruptions that will add costly delays to our members' supply chains."

How do you see this playing out? Do you expect a strike? What are you doing in terms of contingency plans? Let us know your thoughts at the Feedback section below.

Recent Feedback

The ILA is living in a dreamworld. Unions are obsolete, and serve only to crowd out competition.

Woody
Accountant
A Shipping Lines
Aug, 29 2012