The International Longshoremen’s Association and waterfront employers Friday announced a contract extension through Feb. 6, averting a threatened Dec. 30 strike at East and Gulf Coast ports.
The extension came after the ILA and United States Maritime Alliance broke a deadlock on container royalties, a key sticking point. The ILA had threatened to strike when its contract expired at midnight Sunday.
The extension originally was announced for 30 days, through Jan. 28, but the ILA and USMX decided late Friday to push the deadline to Feb. 6 “in view of the year-end holiday season.” The ILA and USMX had previously agreed to a 90-day extension past Sept. 30.
No schedule has been announced for the next round of bargaining, which is being coordinated by a federal mediator.
George Cohen, director of the Federal Mediation and Conciliation Service, announced the extension. He said the ILA and USMX had agreed in principle on the issue of container royalty payments, “subject to achieving an overall collective bargaining agreement.”
He said the extension also would allow the parties to negotiate all remaining master contract issues, including those in the high-cost Port of New York and New Jersey, where employers are seeking work rule changes and productivity improvements.
“Given that negotiations will be continuing and consistent with the Agency’s commitment of confidentiality to the parties, FMCS shall not disclose the substance of the container royalty payment agreement,” Cohen said in a prepared statement. “What I can report is that the agreement on this important subject represents a major positive step toward achieving an overall collective bargaining agreement. While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the upcoming 30-day extension period."
Cargo interests and carriers had been preparing for a strike at 12:01 a.m. Sunday. Initial efforts to extend the ILA contract for a second time collapsed last week over the ILA’s insistence that any extension be tied to maintaining the status quo on royalties. Since the 1960s, ocean carriers have paid per-ton fees to compensate ILA members from loss of work to containerization. Most of the royalty payments support annual cash payments to eligible workers.
USMX has proposed freezing workers’ annual checks from container royalties at current levels, and using the excess to fund other ILA benefits. USMX also said it wanted to phase out royalties over 25 years. The ILA argues that royalties are a permanent wage supplement to offset the continuing impact of containerization.
Carriers’ royalty payments were capped until 2009. Since the program became open-ended, carrier costs under the program have jumped about 50 percent, to $211 million last year. Annual payouts to workers have risen by a similar percentage, and averaged $15,500 in 2011.
Although royalties were a threshold issue in a contract extension, the ILA and employers also face difficult negotiations on work rules and pay practices, primarily in New York-New Jersey, where employers want flexibility to negotiate work rules and pay practices.
Among those work rules and practices are high staffing levels, including requirements that New York-New Jersey terminals hire 15 or 16 ILA members per work gang when only nine or 10 are actually working at a time.
Joseph Curto, president of the New York Shipping Association, said NYSA was relieved by the latest extension to the master contract and to the ILA’s supplemental local contract with the NYSA. He said a strike would have caused severe economic damage and would havedmade it difficult to address needed changes in New York-New Jersey.
The NYSA “is looking forward to getting to the table to begin serious bargaining and to start the process of change,” Curto said.
Shippers also were relieved by the extension. Many supply chain managers had to accelerate bookings, pad stockpiles or divert shipments when a walkout was threatened in September, and then had to repeat the process this month.
Ports along the East and Gulf coasts stayed open longer than usual this week, and several terminals announced plans to keep gates open Saturday to clear cargo in advance of a strike that most considered likely.
With the 30-day extension, terminals and shippers throttled back their strike preparations. At Baltimore, the Maryland Port Administration canceled plans to keep gates open Saturday at its Seagirt and Dundalk terminals. Executive Director James J. White said the MPA was pleased by the extension, but added, “We hope that both sides use this extended time wisely and continue to talk in order to make progress toward a new agreement.” The Port Authority of New York and New Jersey said most terminals in its port also had canceled plans to keep gates open Saturday.
Carriers in the run-up to the potential shutdown accelerated ship schedules where possible and prepared contingencies that included dropping shipments at Canadian or Mexican ports or Caribbean transshipment hubs in case of a lengthy work stoppage.
Matthew Shay, president of the National Retail Federation, said the NRF welcomed the extension. “However, we continue to urge both parties to remain at the negotiating table until a long-term contract agreement is finalized,” Shay said in a prepared statement.
“While a contract extension does not provide the level of certainty that retailers and other industries were looking for, it is a much better result than an East and Gulf Coast port strike that would have shut down 14 container ports from Maine to Texas,” he said.
“A coast-wide port shutdown is not an option. It would have severe economic ramifications for the local, national and even global economies and wreak havoc on the supply chain,” Shay said.
The ILA had said any strike would be restricted to containerized cargo covered by its coastwide master contract with USMX. The union plans to continue handle breakbulk, automobiles, non-frozen perishables, military shipments and passenger ships under supplementary local contracts.
Employers, however, had been discussing whether to counter a strike against containerized cargoes with a lockout of all ILA workers, including those handling non-containerized cargoes such as steel and automobiles. Most bulk grain and oil at East and Gulf Coast ports is handled by non-ILA labor.
The ILA and USMX have been negotiating off and on since last March. The White House has been monitoring the negotiations, and reportedly urging the parties to reach a strike-free agreement.
Business organizations have pushed for stronger action, including invoking the Taft-Hartley Act to seek an injunction requiring that work continue under an 80-day cooling-off period.
The Taft-Hartley Act’s back-to-work provision was last used to halt a work stoppage in 2002, when then-President Bush employed it to halt a 10-day lockout of the International Longshore and Warehouse Union at West Coast ports.
The ILA hasn’t had a coastwide strike since a two-month walkout in 1977 that targeted containers, roll-on, roll-off cargoes and barge-carrying ships.