Tomorrow, Tuesday, January 7, face-to-face negotiations resume between the International Longshoremen’s Association (ILA) and the US Maritime Alliance (USMX). Dockworkers and port operators are facing a January 15 (extended) contract expiration deadline. According to Bloomberg, the crux of the stand-off involves “the use of semi-automated, rail-mounted gantry cranes at port terminals… Such equipment is permitted in the current contract and is already in use at some ILA-operated terminals, but union President Harold Daggett has said he won’t accept a contract that allows for any degree of automation, which he sees as a threat to dockworker jobs.”
In a December 20 statement, USMX argues:
A new Master Contract is essential to keeping our ports open and our supply chains strong. That is why USMX has tentatively agreed to a 62% wage increase for ILA members over the next six years, contingent upon finalizing all outstanding issues—a historic leading wage increase that showcases our commitment to American workers. Beyond the wage increase, central to successfully reaching a new long-term agreement is how we can also strengthen the ability of USMX members to make critical investments in technology and infrastructure to densify and improve the safety, productivity and efficiency of our ports, which provides a direct benefit to both ILA members and businesses in nearly every sector of the U.S. economy. American businesses rely on continuous improvements at our ports to help streamline their supply chains through expediting cargo turn times, attracting more vessel calls, and increasing overall capacity to meet their growing business demands on the export or import side.
On December President-elect Trump met with ILA leadership. Afterward he posted on social media, “I’ve studied automation, and know just about everything there is to know about it… The amount of money saved [instead of employing workers] is nowhere near the distress, hurt, and harm it causes for American workers, in this case, our Longshoremen… I’d rather see these foreign companies spend [profits] on the great men and women on our docks, than machinery, which is expensive, and which will constantly have to be replaced. In the end, there’s no gain for them, and I hope that they will understand how important an issue this is for me” (here and here).
A strike would seriously disrupt maritime flows from Boston to Houston, involving more than half of US container imports (see chart below). Maersk and other ocean carriers have urged customers to retrieve cargo before the end of next week (here and here). US West Coast ports have increased throughput as shippers seek to avoid potential close-downs (here). An extended port shutdown would seriously disrupt, delay, and increase costs across many US supply chains.
While obvious, it is sometimes helpful to be explicit: In most high volume supply chains, midstream functions (at the neck of the hourglass — here and here) are the crucial accelerants or constraints on velocity.
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January 8 Update
CNBC reports that a preparatory discussion was held on Sunday, January 5 between ILA and USMX, “A document produced from the meeting and reviewed by CNBC indicates ports willing to pair any new technology with new union jobs, but it could also introduce new risks to a deal, with added labor costs threatening terms agreed to in October for a 62% pay hike for union workers.”
On Monday gCaptain published a port operator perspective on the negotiations that is consistent with scuttlebutt emerging from my personal network. It is the insider details that matter most, so no pull quote on this one.
The Financial Times frames this particular contract negotiation in a broader context, “What were previously run-of-the-mill negotiations over pay and conditions have mushroomed into larger, more existential disputes over the relationship between humans and machines. Some 70 per cent of the 12mn people represented by the American Federation of Labor and Congress of Industrial Organizations now worry about being replaced by technology, estimates AFL-CIO President Liz Shuler: “Workers are fed up with how they’ve been treated for a long time and are scared about what the future might hold.” Whatever contract the longshoremen negotiate, say analysts, could help provide a template for agreements nationwide.”
January 9 Update: ILA and USMX have reached a tentative agreement. USMX and ILA released a very brief joint statement. (More and more)