ILA Strike Watch 2012
The International Longshoreman Association (ILA) has threatened to strike after the expiration of their current contract at the end of September with the U.S. Maritime Alliance (USMX).
Talks broke down on August 22nd and negotiations on a new master contract have ceased since the introduction of certain items to the table, especially proposed changes in work hours and overtime pay for Longshoremen on the East Coast.
Ocean freight imports (exports as well), especially from China and the Far East to the US East Coast, are at risk of being seriously affected. A strike could have an impact on ocean freight rates and international shipping times.
What caused the threat of a strike that could have serious impact on US East Coast imports and exports?
ILA representatives accused USMX of “gutting wages and benefits” with the new proposals for the contract. Representatives of the ILA also resented the alleged “take it or leave it“ attitude of USMX, which refused to continue negotiations unless these controversial items were added to the contract renegotiation table.
The Maritime Alliance wants to overhaul what it calls “inefficiencies” and “archaic work rules and manning practices... and overtime pay practices that result in millions of dollars being paid for time not worked,” said James Capo, chairman and CEO of USMX.USMX countered that they were willing to make significant concessions on issues raised by the ILA and were disappointed that their own items for negotiation were immediately rejected by ILA representatives.
These issues, Capo further claimed, are driving up prices at East Coast ports, which in turn are causing serious economic losses as carriers use other, less expensive ports to complete their international transactions. Without competitive pricing at their ports, USMX claims, they risk becoming obsolete in the long term.
The members of the ILA responded to these proposed changes by leaving the negotiating table and immediately discussing the possibility of a strike and preparations for such action.
Port authorities, getting wind of this development, responded by making their own plans in case the negotiation stale-mate does turn into a full-blown strike if USMX remains inflexible about the alterations to overtime pay and wages-per-hour for the Longshoremen.
The ports certainly have much to lose from the effects a potential strike could have on the imports and exports via the US East Coast. International shippers could take their imports and exports through alternative ports, costing the East Coast ports serious money from loss of importing and exporting revenue
The Virginia Port Authority (VPA) was one of the first East Coast ports to take strike threats seriously and create a plan of action to minimize economic losses should the strike take place. Leaders at VPA have made plans to move as much cargo as possible before the September negotiation deadline in anticipation of an ILA strike.
Some carriers, especially those doing business between China (and other Far East locations) and the East Coast, may have no choice but to weather the strike. The swiftest carriers complete the journey in over three weeks and that means those carriers currently en route to East Coast ports could arrive at ports in the midst of the strike, where vital Longshoremen services are suspended. Rerouting shipments to alternative ports on the West Coast, Canada, and Mexico would cost carriers more time and money.
Historically, the ILA has not been quick to strike. In fact, the last time a coast-wide strike was implemented was in 1977. Port authorities and others familiar with the ILA are taking the strike threat seriously, making preparations and otherwise indicating that they do not believe the ILA are bluffing.
A Longshoreman strike seems therefore likely and those in the international shipping business should take note and take action before the September 30th deadline.
For continued reading on the possible ILA strike, see the below American Shipper links.