The 14 affected ports would try to maintain operations using management and perhaps outside, non-union workers. But throughput would slow dramatically, and costs would rise. Freight forwarder DSV Air & Sea, for example, has said it will institute a congestion surcharge as of December 5, 2012. Others logistics companies are following suit. (The surcharges only apply if there is in fact a strike or lockout.)

Ports Would Like to Slow Growth of Container Royalty Gravy Train

In the 1950s and early 1960s, as containerized freight started to take hold, port workers were concerned the resulting improved handling of freight would lead to massive job losses. So, they were able to negotiate a fee that would be paid by ports and terminal operators on each container that moved through the port - the idea being that this would provide compensation for the loss of jobs that each container in effect represented.

The first such royalty payments were made in 1968 at the ports of New York and New Jersey. They later spread to other East and Gulf Coast ports.

While the number of dock workers did decline in New York, the shipping container opened up opportunities for ports and ILA members in places like Savannah and Houston. Trade volumes and the number of containers moving through the ports soared many fold over the past 50 years.

The royalty payments reached $211 million in 2011 alone, averaging some $15,500 per worker at the 14 affected ports. With the increased tonnage and a general decline in the number of ILA members in the past 20 years or so, payments per ILA member have continued to rise. At Savannah, for example, they increased from $6,028 in 1996 to nearly $36,000 per worker in 2011.

Naturally enough, the union takes a slice, bringing the ILA itself more than $20 million last year.

However, ILA workers receiving those hefty checks today have no real connection to the perceived threat from container traffic to manually loaded freight and handling work that started the whole program in the 1960s.
Daggett said recently that preventing a cap on the payments is one of the "key battles" the union faces, and that he was "disappointed that USMX continues to post on its website its unwavering position" on the issue.

Meanwhile, the USMX responded by saying ports need to "begin to control" but not eliminate the royalties, which it calls "bonuses." It says it wants to uses savings from some kind of caps to pay for rising healthcare costs and other benefits workers receive.

We will keep you posted. A return to work after the new year may find east coast container traffic at a standstill.

Do we need better understanding of what is really happening with ocean shipping reliability? Why is it so hard to get the data for analysis? Let us know your thoughts either via email or in the Feedback section below. We will keep your comments anonymous by request.