They’re not there yet, but the International Longshoremen’s Association and United States Maritime Alliance are reporting progress on a new master contract for East and Gulf Coast dockworkers.
Three days of negotiations July 18-20 in Delray Beach, Fla., yielded agreement on two of the most difficult issues: technology’s impact on jobs at marine terminals, and union jurisdiction over chassis maintenance and repair.
ILA President Harold Daggett and James Capo, chairman and CEO of USMX, said the Florida talks were productive. In a joint interview, the negotiators expressed optimism about a deal that will avoid an economically damaging work stoppage. “We’re looking a whole lot better than we were two weeks ago,” Capo said. “We still have difficult issues to work through, but we have momentum. We’re moving in the right direction.”
Daggett agreed. “I’m much more confident now that we’ll have a contract,” he said.
With wages and other issues yet to be settled, the biggest challenge may be the calendar. With only two months left before the current contract expires on Sept. 30, cargo interests are at or near the decision point on contingency plans, including whether to shift East and Gulf Coast cargo to the West Coast.
A recent JOC online poll showed many shippers planned to accelerate shipments or divert cargo to the West Coast by the end of July if the ILA-USMX talks didn’t show progress. The National Retail Federation and Retail Industry Leaders Association have publicly urged the ILA and USMX to reach an agreement that keeps ports open.
Until now, most shippers have been watching and waiting. Clarence Gooden, chief commercial officer and executive vice president of sales and marketing at CSX, said in a second quarter earnings call that the railroad had seen no material changes in traffic but that some customers “have begun to make adjustments in … flows of freight coming to the East Coast.”
The next round of negotiations will follow interim meetings by smaller ILA-USMX committees that will discuss specific issues. Meanwhile, ILA and management officials up and down the coast have begun negotiating supplemental local or regional agreements covering pensions, work rules and other port-specific topics. The local talks will be especially contentious in the high-cost Port of New York and New Jersey.
The ILA and USMX are seeking a six-year contract. The current contract was negotiated in 2004 and was revised and extended in 2009. The agreement covers some 15,000 dockworkers from New England to Texas.
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Though the ILA hasn’t had a coastwide strike since 1977, the industry was apprehensive about this year’s negotiations. Since his election as union president last summer, Daggett has emphasized his intention to press for tighter restrictions on automation and chassis maintenance and repair.
Shippers’ concerns spiked in March when he warned the JOC’s TPM ocean shipping conference that a strike was possible. Their concerns were stoked further around Memorial Day, when Daggett and Capo had a testy exchange of letters about the direction of the negotiations.
The rhetoric cooled as the two sides got down to business at negotiating sessions in June and July. The ILA’s 200-member wage scale committee was present for both sessions.
Delegates wouldn’t speak for the record, but several described the agreements on technology and chassis as breakthroughs. Daggett and Capo declined to discuss the agreements in detail, but the ILA president said they were “very significant.”
The two sides agreed the ILA would fill any new jobs created by technology. They established a multistep process under which ILA workers displaced by technology will be eligible for pay guarantees. The guarantees will be 35 hours a week for employees with at least 1,000 hours of work the previous year, and 40 hours a week for employees with at least 1,200 hours the previous year.
The guarantees were described as a limited “bridge” to cushion the impact of technology. A labor-management committee will determine whether workers qualify, and disputes can be taken to arbitration. Displaced workers must be available for retraining and reassignment in order to qualify for payments.
Capo and Daggett emphasized that the program is not a new version of the costly guaranteed annual income program that the ILA and employers instituted during containerization’s early days. The GAI, which paid workers when no work was available for any reason, was phased out in the 1980s and 1990s.
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The agreement on chassis addresses ILA concerns about job losses from ocean carriers’ shift of chassis fleets to leasing companies not covered by the union’s contract.
Major leasing companies that already have taken over carrier chassis have promised to continue to hire ILA labor and respect the union’s existing work jurisdiction. The ILA, however, entered this year’s negotiations determined to ensure the work doesn’t eventually go non-ILA.
The new agreement on chassis contains language designed to preserve the ILA’s jurisdiction over its traditional chassis M&R in port areas. The agreement ensures ILA jurisdiction over any chassis pool equipment not owned by owner-operators or shippers.
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The new agreement also will require future acquirers of chassis to pledge in purchase agreements to continue to hire ILA labor that now performs the work. Ocean carriers still own an estimated one-third of international intermodal chassis.
Wages have been a secondary issue but remain an important component of any agreement. The 2009 contract extension boosted starting pay to $20 an hour, sharply increased most hourly pay scales, and established a schedule for newer workers to advance to top-scale pay, currently $32 an hour.
The extension also removed the caps on the per-ton royalties that ocean carriers pay on containerized cargo. Lifting the royalty caps has funneled about $75 million a year in additional carrier payments into royalty funds that support ILA benefits and bonuses.