East and Gulf coasts brace for impact

By Gary Williams, SSGA Director of Transportation and Regulatory Affairs

Shippers and importers are bracing for a storm on the East and Gulf coasts as the International Longshoremen’s Association (ILA) Union issued stern warnings and strong rhetoric last week. Two main issues loom. The first is an offer by U.S. Maritime Alliance (USMX) management for a 32% pay increase that is being rebuffed by the labor union as far below their ask of a 78% pay increase that is based upon wanting a share of the record profits obtained during the pandemic by ocean container carriers.

Second is the union’s fight against port automation. The ILA submits that wage increases aren’t worth anything to workers that have been eliminated by automation.

The pessimism is growing regarding an agreement being reached before the strike date of Oct. 1, as evidenced by articles in major national publications close to the container industry.

While President Biden will have at hand the Taft-Hartley Act to invoke to bring union workers back to work, the union has pledged to work in extreme slowdown if ordered back. The outcomes for the Trudeau administration intervening were very negative, with a possible early election being called for, which would be expected to go in favor of the Conservatives should the NDP break away from their alliance with the Liberal party there as a reaction to the strike intervention.

Having recently watched the scenario in Canada with rail workers being locked out and immediately ordered back to negotiations and continuance of work, all involved are in a difficult position: Labor is firm on wanting their “piece of the pie” and a labor agreement that exceeds the most recent ILWU contract. USMX is poised to resist as importers and shippers warn of much higher costs charged back to them having a major effect on imports and exports.

With the election on the horizon, the Democratic Party (often considered pro-union) could face potential political backlash from unions if President Biden chooses to intercede, while standing aside could disrupt 60% of the U.S. container volume, valued at $588 billion annually.

The disruption is too great not to affect all other ports, and customers should be made well aware that West Coast execution will most likely experience significant challenges should the strike go into effect for even a short period of time.