Date: Wednesday, November 8th, 2023
Source: Sourcing Journal
The current contract for East Coast port dockworkers doesn’t expire until the end of September next year, but the union representing them has made it clear: members should prepare to go on strike next October.
The International Longshoremen’s Association (ILA), which represents 70,000 dockworkers across 36 ports from Maine to Texas, will “hold firm” on its pledge not to extend the contract beyond the expiration date if a deal is not made, it said in a statement on Saturday.
Ahead of the union’s Educational Conference in Nashville, Tenn. this week, the ILA said president Harold Daggett would update members on current master contract negotiations with the U.S. Maritime Alliance (USMX), and caution them on the “challenging” upcoming wage scale negotiations.
Sourcing Journal reached out to the ILA for comment.
As with the West Coast contract talks earlier this year, retailers will once again be keeping an eye on progress throughout the coming year.
“All the cargo that diverted away from the West Coast and came to the East Coast because of the labor negotiations—there’s the potential for that all to shift back if a contract isn’t resolved, and we start to see disruption,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.
Gold told Sourcing Journal that although the contract deadline is nearly a year away, retailers should have risk mitigation plans in place to avoid any potential port disruptions.
“The one good thing about the fact that the East Coast contract isn’t up until the end of September is that will be the tail end of the peak shipping season for next year, so holiday merchandise will already be in by that point in time,” Gold noted, adding that retailers will likely ship goods in earlier than normal next year to buffer against the threat.
Glenn Koepke, general manager of network collaboration at supply chain visibility platform FourKites, told Sourcing Journal that shippers and beneficial cargo owners (BCOs) will need to account for potentially long lead times as they chart out their 2024 risk and supply chain network. He also noted that since many expect 2024 be a relatively slow market, a possible strike would be less chaotic than it would have been a year ago.
“Communicating and collaborating with suppliers, partners and customers is critical,” Koepke said. ‘Shippers must have up-to-date, pressure-tested continuity plans, as well as systems in place for mass communication and process management. As part of this exercise, mapping out where your raw material products are sourced, where finished goods are being shipped to, the routing locations and estimated exposure to disruption is key to understanding the breadth of your continuity plans.”
The looming negotiations are the latest in a string of labor battles across the apparel supply chain in 2023, which saw victories for West Coast port dockworkers in the U.S. and in Canada, as well as a new contract for 340,000 UPS workers.
Terms for a new deal are likely to be similar to the reported 32 percent wage increase achieved by the International Longshore Workers Union (ILWU) on the West Coast ports, including an added bonus package.
As the deadline nears, the ILA will look to capitalize on the precedent set by its West Coast counterparts. During the ILA’s Quadrennial Convention in July, the Great Lakes District of the ILA said it had already got 40 percent higher wages and benefits for a new six-year contract.
Beyond seeking wages, Daggett has been particularly hawkish in his opposition to automation at the ports, with the union making the issue a central theme of the contract talks. In the past, the ILA have been critical of the ILWU for being too lenient on automation.
During the July convention, Daggett said he intends to build an international coalition of maritime unions to stop automation in maritime operations.
“If foreign-owned companies like Maersk and MSC try to replace our jobs with automation, they are going to get a painful reminder that longshore workers brought these companies to where they are today,” said Daggett during the event.
According to Gold, automation becomes even more of a hot-button issue as the ocean freight dynamic has changed since the pandemic, when container shipping giants were making record profits amid sky-high freight rates.
“The situation is very different now, when the volumes are not as high, and the rates aren’t as high as they were a couple years ago,” Gold said. “Automation is an issue that they’ve talked about nonstop. It’s got to happen at some point in time, but it’s got to be on partnership. Both management and labor need to work on bringing automation into the ports at some point. It’s going to help with efficiency, productivity and safety.”