Dockworkers at Ports from Boston to Houston Halt Labor Talks
As the summer goes on, the ILA contract talks are likely to further inflate container rates that are already on the rise.
The union representing dockworkers at East and Gulf Coast container ports has suspended labor contract negotiations set for Tuesday, citing a dispute over automation.
The breakdown comes less than four months before the current six-year pact between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX), which represents ocean carriers and terminal operators, is set to expire on September 30. The agreement covers about 45,000 dockworkers from Boston to Houston, including six of the 10 busiest U.S. ports.
The impasse also arrives just as a fresh round of global shipping disruptions drives ocean freight rates to highs not seen since the pandemic.
Local agreements were in place at nearly all 14 ports covered under the ILA-USMX master contract when talks broke down at the Port of Mobile late last week, according to a person familiar with the negotiations. The dispute stemmed from automated technology used by APM Terminals to process trucks, which the union says is a violation of the contract.
“There’s no point trying to negotiate a new agreement with USMX when one of its major companies continues to violate our current agreement with the sole aim of eliminating ILA jobs through automation,” ILA president Harold Daggett said in a statement. USMX declined to comment.
A spokesperson said A.P. Moeller-Maersk and APM Terminals, which is owned by the Danish carrier, remain in full compliance with the labor contract and will work with the ILA and other stakeholders to address concerns. “We are disappointed that the ILA has chosen to make selected details of ongoing negotiations public in an effort to create additional leverage for their other demands,” the Maersk spokesperson said Monday.
The ILA hasn’t had a coastwide strike since 1977, but reaching a new deal this summer will likely be difficult. Even without the automation dispute in Alabama, union and industry groups are far apart on wage increases.
The ILA is demanding wage gains to make up for inflation and a share of the extraordinary profits won by ocean liners during the pandemic. It’s asking for more than the 32 percent increase won by its West Coast counterparts last summer, according to the person familiar with the talks.
Headache for the White House
The union said the automation issue must be resolved before the high-level talks on wages can proceed. “With less than four months until the contract’s expiration, the ILA has very little faith that these issues will be addressed in time,” said the ILA statement.
The talks could also be a political headache for the White House, which stepped in last summer to help broker a deal when contract talks hit a wall on the West Coast. This contract expires just weeks before the presidential election, and, unlike ports in California and Washington state, container hubs from Houston to Charleston are in deep-red states. The ILA on Monday called on President Joe Biden to “recognize the threat posed by foreign-owned companies attempting to undermine American jobs.”
The halt to negotiations is “very disappointing” and must resume as soon as possible, said Jessica Dankert, vice president, supply chain, at the Retail Industry Leaders Association. “Together, East and Gulf Coast gateways handle a majority of container traffic in the U.S., and supply chains can ill afford the uncertainty of potential disruption from labor actions—especially heading into peak shipping season for retailers,” she said Monday.
The longer negotiations go on, the higher the risk of a major disruption, said Koray Köse, chief industry officer at Everstream Analytics, a supply-chain risk assessment firm. “It will become very hot if this is not settled rather quickly.”
The shipping industry, meanwhile, is under strain from a number of other issues, including attacks on vessels in the Red Sea, which have caused congestion and stretched capacity on other trade lanes, Köse said. Looming trade tariffs are also encouraging importers to deliver goods before global trade wars heat up.
As the summer goes on, the ILA contract talks are likely to further inflate container rates that are already on the rise, he said. Taking all these factors into consideration, plus the approaching U.S. election, Köse said, “you basically have the perfect storm for failure.”
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