USMX's Capo Warns of Competition for ILA

Management officials urged the International Longshoremen’s Association to work with employers to compete with West Coast ports and attract the investment Atlantic and Gulf ports need to benefit from an expanded Panama Canal.

“We’re not in competition, we’re in this together. But there is competition -- we’re competing with the rest of the world,” James Capo, chairman of United States Maritime Alliance, told delegates at the ILA’s quadrennial convention in Hollywood, Fla.

USMX and the ILA are expected to begin negotiations in the coming months with Harold Daggett, who takes over as ILA president Thursday, on a coastwide contract to replace the one that expires Sept. 30, 2012.

Capo said companies will watch the negotiations closely to gauge the reliability of East and Gulf coast ports. He also warned that increased business from the 2014 opening of larger locks at Panama is not guaranteed and that industry perception is critical.

To handle bigger ships moving through the canal’s wider locks, ports need public and private infrastructure investment. “That gets back to the issue of how important technology and productivity are, and obviously any type of labor unrest would be somewhat problematic,” Capo said.

He cited western railroads’ investments in intermodal services and statements by International Longshore and Warehouse Union officials that the ILWU wants to emphasize productivity and regain cargo lost after a 2002 port shutdown.

Tony Scioscia, senior vice president of labor relations at Maersk Inc., reminded ILA delegates that carriers can operate a trans-Pacific service with four ships but need nine for an all-water service via Panama. He said ship lines “will be investing in services that have growth and are profitable” and that recent vessel layups show carriers “are willing to change service networks in response to market demand.”

Capo said a 2009 agreement that extended the current contract by two years into 2012 benefited ILA and USMX members. He said ILA members’ wages and container royalty bonuses last year averaged $71,500 and benefit costs averaged $46,500, for total average compensation of $118,000.

Future growth in jobs and incomes depends heavily on industry perceptions, Capo said. He raised the questions of whether the shipping industry is becoming concerned that the ILA is becoming more militant and less reliable.