After a mighty bluster in the run-up to negotiations for a new contract at East and Gulf Coast ports, the tone and rhetoric from the nation’s second-largest longshore union and its management counterpart has softened dramatically now that the talks are under way.
After an exchange of initial proposals by the International Longshoremen’s Association and United States Maritime Alliance, ILA President Harold Daggett and USMX Chairman and CEO James Capo said they are confident about reaching an agreement before the current contract expires.
“We had a productive exchange of ideas that will give us a good start toward negotiating a contract sooner, rather than later, in 2012,” Daggett and Capo said in a joint statement. “Both sides recognize the importance of the East and Gulf Coast ports to the nation’s economy and remain committed to reaching an agreement without any disruption to port operations.”
The union and its employers, they noted, have negotiated nine coastwide master contracts since the last full-blown ILA strike in 1977. The current contract took effect in 2004 and was extended for two years after changes were negotiated in 2009.
The ILA-USMX statement sought to reassure shippers concerned about port disruptions when the ILA contract expires on Sept. 30. Daggett rattled the industry last month when he warned a Trans-Pacific Maritime Conference audience that a strike was possible. Several large shippers said they planned to divert some cargo to the West Coast as early as midsummer if the negotiations don’t show progress.
As negotiations started last month in Tampa, Daggett avoided saying anything to rile shippers further. The ILA and USMX announced a news blackout on the talks, and declined to release details of their proposals.
Members of the union’s wage scale committee who heard the proposals described them as mostly general in nature. The initial proposals were only the first cut at an agreement. The two sides will get down to details in subsequent sessions, probably starting this month.
The ILA’s main demands deal with automation, union jurisdiction, chassis maintenance and repair, and overweight containers. At the TPM conference, Daggett identified each of those as a potential strike issue.
Wage demands appear to be secondary. ILA straight-time pay starts at $20 an hour for new hires and rises to $32 an hour after nine years. Most workers also receive hefty annual bonuses funded by carrier payments into container royalty funds that date to the 1960s.
USMX expressed a desire for a six-year contract, which ILA officials said they viewed favorably. The ILA-USMX master contract covers wages, fringe-benefit contributions and other issues for container and roll-on, roll-off cargo. Supplemental local or regional agreements cover work rules, pensions and other port-specific issues.
Local negotiations in New York-New Jersey may be especially difficult this year. The New York Shipping Association has said it will seek improved productivity by addressing decades-old work rules and practices. Some 40 percent of the hours paid to ILA workers are for time in which no work is performed.
This year’s negotiations are occurring against a backdrop of renewed operating losses by major container ship lines, and by other industry developments such as the expected 2015 opening of wider locks at the Panama Canal.
When the current contract was extended two years ago, the USMX estimated the extension would raise employers’ costs 5 percent by raising pay and eliminating caps on carriers’ container royalty payments. That assumed containerized cargo volume at East and Gulf Coast ports would total 100 million tons a year, an estimate that has proved conservative as volume has recovered from the recession.
The 14 ports covered by the master contract handled more than 110 million tons of import and export cargo last year, raising carriers’ royalty payments about $75 million a year over 2009 levels.