The International Longshoremen Association (ILA) and United States Maritime Alliance (USMX) are set to resume labor negotiations Tuesday in the hopes of averting a sequel to October’s massive port strike.
The ILA’s demands are centered around automation, which it believes is a threat to the job security of its roughly 45,000 members covered by its contract with the USMX. That includes the use of semi-automated cranes that stack containers on docks as well as fully-automated machines.
The union said that port employers had convinced the group’s then-leaders that using semi-automated cranes in the Norfolk International Terminals would eventually help create thousands of new jobs. That paved the way for the replacement of traditional equipment with cranes that have less human involvement across other ports in the U.S.
“What seemed like a win for one port turned out to be the project that is becoming the model for automation that could potentially chip away at many jobs at almost every other terminal along the East and Gulf Coasts,” ILA executive vice president Dennis Daggett wrote in a Dec. 2 blog post.
In its own statement, seemingly in response to Daggett, the USMX argued last month that the “only way” for ports to handle higher volume is by densifying terminals. The alliance of companies, terminal operators, and port associations argues that it doesn’t want to “eliminate” jobs but continue using advanced technology, including the semi-automated cranes that the ILA says it regrets agreeing to.
“We cannot risk moving the industry backward with unworkable restrictions on the implementation of modern technology already in use — and permitted by the existing contract — which would serve only to decrease efficiencies at ports, reduce existing capacity, prevent increased cargo volumes and throughput, and block further growth in union jobs and wages,” the USMX said.
Besides issues of automation, the ILA is demanding higher wages and a salary that outpaces inflation and provides more than the small wage increases it agreed to in 2018. In October, the USMX and ILA reached a tentative agreement to end a three-day strike that included wage hikes of 62% over six years, raising average wages to roughly $63 per hour from $39 per hour by the end of the contract.
But that pay raise — which was below what the ILA demanded — is contingent on reaching a solution to the automation issue, among other outstanding matters. If the two parties can’t come to an agreement by Jan. 15, the ILA will return to the picket lines just days ahead of President-elect Donald Trump’s inauguration.
In December, Trump slammed companies’ reliance on automation, writing on his Truth Social that “the amount of money saved is nowhere near the distress, hurt, and harm it causes for American Workers, in this case, our Longshoremen.” He also took aim at foreign companies that “made a fortune in the U.S.,” likely referring to the various international members of the USMX, such as Maersk (AMKBY-0.71%), Hapag-Lloyd (HPGLY0.00%), and MSC.
In September, ahead of the ILA’s short-lived strike, about 180 associations representing companies across a series of industries warned a strike would be “devastating” to the U.S. economy.
Just about every industry relies on major ports across the East Coast and Gulf Coast to deliver shipments of equipment, food and supplies each day. In October, workers walked off the job at ports that collectively account for approximately 51% of the nation’s port capacity.
Companies that would likely be hit hard by a strike include automakers, such as General Motors (GM+3.09%) and Hyundai Motor Co. (HYMTF+3.92%), retailers like Ikea and Home Depot (HD-0.04%), and tire makers Goodyear (GT-2.10%) and Michelin (MGDDY+2.42%). Grocers and restaurants would likely have issues getting fresh fruit and vegetables, especially from areas in Central and South America, while exports of red meat and other goods would also be affected.
Several carriers, including Hapag-Lloyd, ZIM (ZIM-3.80%), and CMA GCM, have warned clients about potential surcharges ahead of the negotiation deadline. Last week, Maersk warned customers to pick up their loaded containers and return empty ones at East and Gulf Coast ports before January 15.
During last fall’s walkouts, estimates of the potential damage to the global economy varied widely. Some forecast damages of as low as $540 million per day, while others went up to $5 billion per day, with as many as 100,000 jobs expected to be impacted.
“Strikes are a last resort for the ILA, not a reckless decision,” Daggett wrote in December. “Any short-term impact of a strike is dwarfed by the long-term consequences of allowing automation to hollow out the industry. Protecting workers’ jobs today ensures the economic stability of countless families and communities tomorrow.”
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