The looming East and Gulf Coast port strikes by the International Longshoremen’s Association (ILA) “could have devastating economic consequences as inventory depletion, rerouting, hoarding, and price speculation ripple through supply chains of global companies,” said the risk management firm Marsh Consulting in a new report.
A West Coast port strike by a clerical workers’ unionlasted eight days before it ended this week.
“Potentially, the strike on the East Coast is going to be a much bigger strike,” said National Retail Federation VP of supply chain Jonathan Gold. “This potential strike (would span) Maine to Texas, so the effects could be bigger.”
The American Apparel and Footwear Association’s CEO Kevin Burke added, “More than four million U.S. apparel and footwear industry workers count on our ability to move product in and out of the county as quickly and efficiently as possible. Any port work stoppage impedes four million U.S. workers from being competitive in the global market. We should now focus our attention on ensuring the stakeholders on the East Coast are negotiating in earnest to prevent a strike from ever happening along the East Coast. Time is running out for a deal, and our economy cannot handle another major work stoppage at some of America’s busiest ports.”
The contract between the ILA and the U.S. Maritime Alliance (USMX) for the East and Gulf Coast ports expired in September but was extended to December 29. If an agreement isn’t reached, ILA workers have threatened to strike. The ILA has called for contract wage scale meetings with the USMX for Monday, December 10.
The ILA has accused the USMX of pitting one port against another. A sticking point in negotiations is a cap on the so-called “container royalty,” which the USMX calls a bonus and the ILA calls a much-needed wage supplement.
“It is regrettable that USMX has engaged in misleading rhetoric and scare tactics during the time they should have been negotiating with the ILA,” said ILA president Harold Daggett. “They put more effort into their media statements than in preparing contract documents. It’s not surprising since they invest in building new ships at nearly $200 million each, but don’t put a dime on the table in negotiations to compensate ILA members who helped them accumulate their riches.”
In its own statement, USMX CEO James Capo countered, “The current economic reality demands that we improve efficiency and productivity at the ports. It also requires that we begin to control container royalty payments that have risen dramatically since they were first established in 1960, totaling $211 million in 2011 or an average of $10 per man hour. Employers are not seeking to eliminate these bonuses, only to cap them and use the extra money to help pay for benefits for ILA workers.”