Shippers are relieved that a 90-day contract extension averted a threatened International Longshoremen’s Association strike at the height of the retail peak season. According to the ILA, so is the White House.
“Reports coming out of Washington indicate President Obama himself expressed concern about a work stoppage on the East and Gulf coasts five weeks before Election Day,” the ILA said in a posting on its Facebook site.
Obama, Labor Secretary Hilda Solis and Transportation Secretary Ray LaHood were “grateful” for the extension, the union said.
Shippers were even more grateful. They’d already incurred extra costs to ship cargo in advance of the ILA’s Sept. 30 contract expiration, or to divert some of their shipments to the West Coast. “This extension should provide for a stable holiday shipping and shopping season over the next few months,” said Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation.
The NRF, the Retail Industry Leaders Association, the Waterfront Coalition and organizations representing apparel and toy importers are among shipper groups to urge the ILA and USMX to avert a port shutdown.
“The 90-day extension is welcomed news for retailers because it ensures that a work stoppage at the ports will not interfere with the flow of goods during the critical holiday season,” said Kelly Kolb, RILA’s vice president for government affairs.
Several ocean carriers had filed notice of plans to impose congestion surcharges of $1,000 or more per 40-foot container if East and Gulf Coast ports shut down.
The extension “is a significant step forward, and signals that both sides — labor and management — are serious about reaching a deal, Gold said. But he said retailers’ concerns wouldn’t ease until a new contract deal is reached.
The ILA and United States Maritime Alliance agreed to extend the contract through Dec. 29. The extension came after a two-day bargaining session overseen by a federal mediator who was called in after negotiations broke off in late August.
“In taking this significant step, the parties emphasized that they are doing so ‘for the good of the country’ to avoid any interruption in interstate commerce,” George Cohen, chairman of the Federal Mediation and Conciliation Service, said in a statement. “This extension will provide the parties an opportunity to focus on the outstanding core issues in a deliberate manner apart from the pressure of an immediate deadline.”
Extending the contract also ensures ILA members will receive their annual December bonuses from carriers’ tonnage-based royalties, and that funding will continue for ILA-staffed container freight stations. ILA members’ royalty bonuses averaged $15,500 last year.
Even with the new deadline, difficulties remain. Negotiators plan to resume meetings this month on a coastwide master contract covering wages for container and roll-on, roll-off cargo; container royalties; medical benefits; jurisdiction; technology; and other issues.
The ILA and USMX have agreed on a program to compensate dockworkers displaced by new technology, and on protection of ILA jurisdiction over chassis maintenance and repairs. Automation and chassis were among the points ILA President Harold Daggett had identified as potential strike issues.
Negotiators also are working on supplementary local agreements covering breakbulk cargo, work rules, pensions and other port-specific issues. The most difficult of those local negotiations is expected to be the one between the ILA’s New York-New Jersey locals and the New York Shipping Association.
NYSA members say they’re determined to win revisions to long-standing work rules and overtime practices they say make New York-New Jersey the world’s most expensive port. The ILA is resisting those changes in its headquarters port.
Employers are seeking changes in eight-hour work guarantees and in rules that allow many workers to rack up large amounts of overtime. In New York-New Jersey, these decades-old “customs and practices” have been carried forward from contract to contract.
About three dozen ILA workers in New York-New Jersey receive cash compensation of more than $375,000 a year, plus medical and other benefits. More than half of ILA members in the port have cash compensation of more than $100,000.
Port officials have said investments in dredging, rail, road and other projects such as raising the Bayonne Bridge must be accompanied by improved port labor productivity if New York-New Jersey is to compete for Midwest intermodal cargo.
Secondary issues in this year’s negotiations include a management proposal to use future increases in container royalties to cover shortfalls in other ILA benefit programs. Royalties were established in the 1960s to protect longshoremen from the loss of work due to containerization. Carriers’ coastwide royalty costs totaled $211 million last year. Worker bonuses vary by port but ranged up to $36,000 at Savannah.