While 2023 marked the overdue conclusion of a new West Coast port labor agreement between the International Longshore Warehouse Union and the Pacific Maritime Association, an East Coast labor agreement awaits to be completed in 2024, by the end of September, between the International Longshoreman’s Association (ILA) and the United States Maritime Alliance (USMX).
The ILA is the largest union of maritime workers in North America, representing workers at 36 ports from Maine to Texas. And the USMX is an alliance of container carriers, direct employers, and port associations serving United States-based East and Gulf Coasts.
The current six-year labor deal between the parties was completed in September 2018 and covers roughly 14,500 U.S. East and Gulf Coast port workers. ILA said at the time of the deal’s completion that this six-year contract extension will bring generous pay increases, landmark protections against job-killing fully automated ports, and labor peace and stability through September 30, 2024.
As the clock ticks on the expiration of the current deal, industry stakeholders are clamoring for a new deal to be reached in a timely manner, which will not negatively impact, nor disrupt, port operations, at a time when supply chain issues have ostensibly been prevalent for more than a while, coupled with ongoing Red Sea and Panama Canal issues, as well as 2024 being an election year.
That was made clear in a letter written earlier this year to ILA President Harold Daggett and USMX President and CEO David Adam by National Retail Federation (NRF) President and CEO Matthew Shay.
“It is critical that a new deal agreement is reached before the current one expires to provide supply chain stakeholders with the certainty they need for their operations,” wrote Shay.
And he also cited how with shippers evaluating alternative alternatives, or contingency plans, to address the Red Sea and Panama Canal issues, the potential for a coastwide disruption from labor negotiations could lead to retail shippers and other businesses shifting operations away from East and Gulf Coast ports. What’s more, he added that timing is key in getting a deal done, with the contract’s expiration date in line with Peak Season, too.
A Wall Street Journal report said a key objective for the ILA is leveraging strong wage gains, akin to deals other transportation unions have obtained, adding that the ILA is threatening to strike if a new multiyear deal is not done by September 30. The report added that Daggett has directed ILA’s local chapters “to resolve local work issues with employers by May 17 so that a coastwide deal can be negotiated before the current deal expires.” The article added that the ILA is looking for a larger wage increase than the 32% increase secured over six years in the West Coast deal last year.
NRF Vice President, Supply Chain and Customs Policy, Jonathan Gold told LM that going back nearly two years ago, there was interest and excitement among supply chain stakeholders regarding ILA and USMX starting early negotiations, which would have provided supply chain stability amid the various issues at that time, including the pandemic and last year’s West Coast port negotiations.
“Our members are now planning for Peak Season [August through October] and have to make decisions now on where they are bringing their cargo,” said Gold. “If they don’t have a good sense of where negotiations stand, they are going to make alternate plans to make sure they don’t get caught up in any kind of disruption that may occur. We know there are some big issues that need to be discussed between the parties, like wages and benefits, and technology, which continues to be a big issue for the ILA.”
As for potential contingency options, Gold said one option for shippers is to bring product in early, which could lead to congestion issues, depending on final destination. Shipping to the West Coast, something which shippers did in reverse last year amid the West Coast port labor talks, is already happening or at least being considered.
“They need to think about shipping earlier or shipping somewhere else,” said Gold. “These are decisions that need to be made now.”
Another shipper group, the American Apparel & Footwear Association (AAFA) recently penned a letter to President Biden, calling for the White House to bring the ILA and USMX back to the table to restart negotiations and prevent East and Gulf Coast ports service disruptions.
“Negotiations stalled in March 2023 after only a few weeks of talks,” wrote AAFA President and CEO Stephen Lamar. “Any work slowdown or stoppage leading up to or after the expiration of the contract would have a devastating impact on American consumers, American workers, and the U.S. economy. This is of considerable concern.”
