This story appears in the Sept. 3 print edition of Transport Topics.
Shippers and truckers are urging officials of the International Longshoremen’s Association and the United States Maritime Alliance to restart contract discussions so that the just-beginning fall freight shipping season won’t be disrupted.
The National Retail Federation, the National Industrial Transportation League and American Trucking Associations’ Intermodal Motor Carriers Conference are among the groups calling for the immediate resumption of contract talks.
The United States Maritime Alliance is also known as USMX.
If a new deal is not reached by Sept. 30, workers at ports along the East Coast and Gulf Coast could strike. Talks between the ILA and USMX, which represents management, broke off in Florida late last month with no date set for a resumption of the negotiations.
Amid the uncertainty, shippers continue to gear up for their busiest season as holiday-related retail goods arrive in the United States this month.
In an Aug. 27 letter, Matthew Shay, CEO of NRF, said both sides should “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.”
“The news out of Florida last week certainly raises everyone’s concern and heightens the importance of having contingencies in place to meet disruptions that would affect supply chains in the event of a work stoppage,” Peter Gatti, executive vice president of NITL, told Transport Topics on Aug. 27.
ILA members handle about one-third of all U.S. containerized freight, which come through the ports on the East and Gulf coasts, according to the American Association of Port Authorities.
Business at East Coast ports rose at a 5.5% pace in the first half of 2012, compared with a year earlier, while the rise on the West Coast was only 3%.
The Port of New York and New Jersey, the third-largest U.S. facility behind only Los Angeles and Long Beach, Calif., processes more than 30% all of traffic coming through East and Gulf Coast ports.
Truck shipments of international cargo in the New York/New Jersey area average about 7,500 a day, or 87% of landside moves, based on Port Authority statistics. The rest travels by rail.
“One has to have a high level of concern when they are not talking — they still have a lot to do,” said Curtis Whalen, executive director of IMCC. “People have done a lot of planning for the possible disruption. People are trying to hedge their bets.”
Jeffrey Bader, CEO of drayage fleet Golden Carriers, Hillside, N.J., was blunter.
“Every night I go to sleep and hope these guys make a deal,” he told TT. “Every morning I wake up and hope that I read in the paper that these guys have made a deal. Striking would hurt the entire East Coast at a time, hopefully, of an economic recovery.”
“Shippers are already diverting cargo to the West Coast instead of the East Coast,” said Ben Hackett, founder of Hackett Associates, whose Port Tracker Report forecasts September and October port volumes to rise about 10%.
“These numbers all show significant increases for the months when retailers will be bringing merchandise into the country for the crucial holiday season,” said Jon Gold, vice president of supply chain and Customs policy for the NRF.
“Some NRF members have told me they already enacted some contingency plans to either shift cargo to the West Coast or bring it in early to avoid a potential strike in October,” Gold told TT.
The negotiating tone turned on Aug. 22 when talks were halted, reversing reports from both sides in July that an agreement had been reached on key bargaining issues such as chassis maintenance and automation.
“USMX and its member companies are disappointed with the uncompromising stand the ILA leadership is taking in the negotiations,” the management group said in a web posting. “The ILA’s posture is contrary to the history of cooperation that has characterized these negotiations.”
The last work stoppage at East and Gulf Coast ports was in 1977. The last job action affecting trade occurred in October 2002, when International Longshore and Warehouse Union workers on the West Coast were locked out by the Pacific Maritime Association.
Management focused on payment of “royalties” for dock workers’ handling of container shipments, saying it was costing them $232 million annually and adding $15,500 per year to dock workers’ paychecks. USMX said those payments, which began in the 1960s as dock jobs were lost due to containerization, should be capped at current levels.
ILA workers average $124,318 annually in wages and benefits, and some make $368,000 annually, the management group said.
“The ILA is discouraged over the ‘take it or leave it’ approach by United States Maritime Alliance,” a union statement said. “USMX should stop the inflammatory rhetoric. USMX should recognize that it cannot change overnight benefits that were achieved over many years of collective bargaining.”