Shippers Nervous Over Negotiations Impasse Between Labor, Terminal Operators

“Either a strike or new tariffs would be a blow to the economy and retailers are doing what they can to avoid the impact of either for as long as they can,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a Dec. 9 release on NRF's monthly U.S. port volumes report. “We hope that both can be avoided, but bringing in cargo early is a prudent step to mitigate the impact on our industry, consumers and the nation’s economy. We call on both parties at the ports to return to the table, get a deal done and avoid a strike. And we call on the incoming administration to use tariffs in a strategic manner rather than a broad-based approach impacting everyday consumer goods.”

NRF's statement follows a Dec. 6 letter signed by a coalition of 267 trade associations, urging the International Longshoremen's Association (ILA) and the U.S. Maritime Alliance (USMX) to resume labor contract negotiations so that they can agree to a new contract that would replace the old one expiring on Jan. 15.

The coalition's letter, backed by NRF, the National Customs Brokers & Forwarders Association of America and the Airforwarders Association, among others, was addressed to ILA President Harold Daggett and USMX CEO David Adam.

"It is imperative for the parties to resume negotiations and remain at the table until a new contract is reached. We know significant issues remain between the parties. However, we continue to believe the only way to resolve these issues and come to an agreement is to actually stay at the negotiating table," the letter said.

The ILA and USMX had reached an agreement over pay in October, ending a three-day strike then. But they extended the negotiation process to January to hash out other issues, including those related to the use of automation at the ports (see 2410040038).

The three-day October strike had a significant impact on the supply chain, resulting in additional costs to mitigate the strike's effects, and companies are still implementing those strategies out of concern about a potential strike in January, according to the letter. Shipping groups urged both sides to have meaningful discussions about the use of automation at the ports, which may help U.S. ports remain competitive.

"It is critical that our ports and terminals have the ability to modernize their systems and processes in order to remain globally competitive and be able to handle the continuing rise of trade volumes, both imports and exports, through our ports," the letter said. "Modernization can only happen through true partnership between labor and management, as well as the other supply chain stakeholders that rely on these ports. Modernization efforts will benefit all parties and are essential to address current and future throughput issues. We firmly believe the remaining issues can only be resolved by returning to the negotiating table and remaining until a final deal is complete."

However, shippers are also unsure whether both sides will actually reach an agreement on automation.

“Prospects of reaching a quick agreement on the key sticking point of automation are not looking good," said Ben Hackett, founder of Hackett Associates, which produces the monthly ports report with NRF. "The window to frontload goods on vessels arriving before a potential strike is quickly closing. Then there are issues as President-elect Trump promises to increase tariffs when he takes office. It is not clear whether this will actually take effect immediately or whether it will take time to implement the tariffs, but shippers are moving up as much cargo as they can before then.”

Last week, the ILA's Daggett said the union is "at a crossroads" in its contract negotiations with ocean carriers and employers, with the sticking point being USMX's push to expand the use of semi-automated rail-mounted gantry cranes.

"The ILA is not against progress, innovation, or modernization -- but we cannot support technology that jeopardizes jobs, threatens national security, and puts the future of the workforce at risk," Daggett said.

Meanwhile, USMX said modernization and investment in new technology are "core priorities" that must be addressed in negotiations with the union. USMX's members include container carriers, marine terminal operators and port associations.

"Port operations must evolve, and embracing modern technology is critical to this evolution. It means improving performance to move more cargo more efficiently through existing facilities -- advancements that are crucial for U.S. workers, consumers, and companies," USMX said. "Due to the lack of available new land in most ports, the only way for U.S. East and Gulf Coast ports to handle more volume is to densify terminals -- enabling the movement of more cargo through their existing footprints. It has been proven this can be accomplished while delivering benefits to both USMX members and to the ILA."