James Capo has been working for months to calm shippers’ concerns about the impending East and Gulf Coast longshore labor negotiations. The chairman and CEO of United States Maritime Alliance emphasizes that bargaining “is a process … You have to give it time.”
That process will begin this month when representatives of USMX and the International Longshoremen’s Association meet in Tampa for an expected exchange of initial proposals on a contract to replace the one that expires Sept. 30.
Cargo interests have been watching nervously for clues to the direction of this year’s talks, the first since Harold Daggett’s election as ILA president last July. Daggett did little to reassure them with his bellicose comments at this month’s Trans-Pacific Maritime Conference.
Daggett unnerved TPM attendees by listing four potential strike issues: automation, union jurisdiction, chassis maintenance and repair, and overweight containers. “I’m not threatening a strike, but you’ve got four hurdles to jump over,” he said.
The ILA president tempered his remarks, promising to work for a peaceful settlement, citing the union’s decades-long record of strike-free contracts, and saying it is too early to predict the outcome of negotiations. “We’re trying our best to avert a strike,” he said.
Other ILA leaders also sought to allay shipper fears. The ILA hasn’t had a coastwide strike in 35 years, and the union isn’t seeking one now, said Benny Holland, the union’s executive vice president. “We don’t want any of you leaving here thinking you have to divert cargo,” he said.
Capo also noted the record of successful negotiations, and said he’s “optimistic, maybe even confident” the two sides can reach agreement without a work stoppage. “I think I speak for both sides in saying failure to reach an agreement by Sept. 30 is really not an option,” he said.
The stakes are high. Shippers must decide soon whether to activate contingency plans for some of their fall peak-season imports to the West Coast, where the International Longshore and Warehouse Union’s contract isn’t up for negotiation until 2014. Diverting cargo would cost shippers by forcing them to adjust inland distribution as well as ocean routings.
Cargo diversion also would be costly to ILA members: Each 1 percent drop in annual container volume through East and Gulf Coast ports would have a $9 million impact on coastwide benefit funds, in addition to lost wages and reduced revenue to local benefit programs.
Some major shippers say they’re already preparing to implement contingency plans as early as June if negotiations don’t seem to be progressing well. Others suggest Daggett’s bombast was pre-negotiation posturing, and say they hope things will settle down once the two sides get down to business.
But many shippers were alarmed by Daggett’s saber-rattling at the TPM conference, and were not reassured by his pledges to work for a disruption-free contract. In a speech and question-and-answer session, he said “dark clouds” hang over the negotiations. He even suggested the ILA might call a “selective” strike targeting larger carriers if a deal can’t be reached by Sept. 30.
Some of his most vehement remarks were directed at labor-saving technology. He acknowledged technology couldn’t be stopped, but said the ILA will seek job guarantees for workers affected by it.
Employers insist technology is necessary to achieve the efficiency needed to handle rising cargo volumes and attract investment in East and Gulf Coast ports. “At the end of the day, growth is the best guarantee of jobs,” Capo said.
Daggett’s remarks about union jurisdiction are directed largely at chassis management, which is undergoing a metamorphosis as carriers transfer equipment ownership and M&R to third parties. The ILA president reiterated he wants to bring chassis lessors under the union’s master contract, even though the largest lessors have signed and adhered to pledges to respect ILA jurisdiction.
The ILA wants a crackdown on overweight boxes to improve safety and ensure full collection of tonnage-based royalties carriers pay to support ILA bonuses and benefits. Carriers support accuracy in container weights, which, in addition to enhancing safety, would increase the number of boxes shipped, but employers want to ensure it’s not at the cost of excess staffing at terminals.
As always, wages and benefits will play a role in the negotiations. An ILA contract extension in 2009 raised starting pay to $20 an hour, narrowed wage tiers and set a schedule for newer workers to eventually graduate to top straight-time pay of $32 an hour.
The extension also removed caps on container royalties, a key part of ILA contracts since the union’s late President Teddy Gleason first negotiated them decades ago. Last year, carriers paid per-ton royalties on more than 110 million tons of cargo. Before the contract extension, those payments were capped at 73 million tons a year.
Unlike the single ILWU contract on the West Coast, the ILA’s contract negotiations are two-tiered. Negotiation on a coastwide pact for containers and roll-on, roll-off cargo is followed by bargaining on local or regional contract negotiations covering benefits, work rules and other port-specific issues.
Some of the local negotiations may be as intense as the master contract talks, particularly at the Port of New York and New Jersey, where employers will seek to boost productivity and rein in costs. At the port’s five main terminals, companies last year paid wages and royalties averaging $118,000, plus $108,000 in average fringe benefits, for a total cost of $226,000 per ILA worker under New York Shipping Association and Metropolitan Marine Maintenance Contractors Association contracts.
Daggett has bitterly criticized a NYSA lawsuit seeking some $6 million in damages for a September 2010 work stoppage that idled the port for two days in a protest of Fresh Del Monte’s shift of Philadelphia-area fruit imports to a non-ILA terminal. He called the lawsuit an attempt to intimidate the union and said the ILA “will not be bullied.”
The NYSA contends the work stoppage was an illegal strike that blindsided carriers and terminal operators at the height of the peak import season. The lawsuit also has put the ILA on notice that management won’t tolerate work stoppages or slowdowns during this year’s contract negotiations.
In 2002, work slowdowns by the ILWU triggered a Pacific Maritime Association lockout that closed West Coast ports for 10 days until the Bush administration won a back-to-work injunction under the Taft-Hartley Act.
No one’s predicting similar developments on the East and Gulf coasts this year, but if a work stoppage develops, presidential politics could come into play. The Sept. 30 contract expiration is just five weeks before the Nov. 6 election.