The California Chamber of Commerce has joined a coalition of 267 federal, state and local trade associations in urging East/Gulf Coast labor and management leaders to resume port labor negotiations.
The goal of returning to the bargaining table should be agreeing on a new labor contract before the current one expires on January 15, 2025, the coalition said in its December 6 letter to Harold Daggett, president of the International Longshoremen’s Association (ILA) and David Adam, chairman and CEO of the United States Maritime Alliance, Ltd. (USMX).
The letter stated that the continuing start and stop of the negotiations leads to further uncertainty in the supply chain, which continues to cause challenges.
The coalition represents U.S. manufacturers, farmers and agribusinesses, wholesalers, retailers, restaurants, importers, exporters, distributors, transportation and logistics providers, and other supply chain stakeholders.
The letter acknowledges that automation and technology continues to be the biggest issue of disagreement between the ILA and USMX but argues there is a path forward for the parties to address this issue.
The coalition asserts that it is critical that ports and terminals have the ability to modernize their systems and processes to remain globally competitive and be able to handle the continuing rise of trade volumes, both imports and exports, through the nation’s ports.
Modernization can happen only 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 issues.
From the past strike in October, it is clear that President Joe Biden won’t take any action to end a strike. It is unclear what President-Elect Donald Trump will do when he takes office on January 20, 2025, although he has clearly indicated support for the ILA.
Past Strike
On Thursday, October 3, three days after the strike began, joint statements from the ILA and the USMX management group, representing shipping lines, terminal operators and port authorities, announced a tentative agreement that extended the current master contract to January 15, 2025.
The tentative agreement includes a 61.5% wage increase over the life of the six-year contract — raising average wages from $39 an hour to about $63 an hour. The ILA originally had requested 77%, and the USMX countered with 50% earlier in the week.
The union members went back to work on Friday, October 4 while the final details were worked out in a full agreement. The subjects of health care and automation continue to be a point of contention. European ports have addressed automation with an agreement to no layoffs, early pensions, and extensive retraining.
The ILA strike affected 45,000 dockworkers at 36 container ports from Texas to Maine — including New York/New Jersey, Houston, and Savannah, Georgia. The contract in question covers six of the 10 busiest U.S. ports, which collectively handle more than 13 million containers annually.
The strike had the potential to disrupt U.S. supply chains, pose national security implications, and in general terms, paralyze as much as half the nation’s seaborne trade volumes.
Shipping Data
Nearly 70% of U.S. exports and 56% of containerized U.S. imports come through East Coast and Gulf Coast ports, according to data cited by the National Association of Manufacturers. More specifically:
- More than 68% of all containerized exports and more than 56% of containerized imports flow through East and Gulf Coast ports, representing an average daily trade value of more than $2.1 billion.
- They handle more than 91% of containerized imports and 69% of containerized exports of pharmaceutical products.
- They also process more than 76% of containerized vehicle exports and more than 54% of containerized vehicle imports.
- For aircraft and spacecraft, more than 77% of containerized exports and more than 51% of containerized imports go through these ports.
Products Potentially Affected
Perishable food imports, wine, auto parts and pharmaceuticals from Europe can be greatly affected. Ports on the East and Gulf coasts handle roughly 75% of the bananas that enter the United States. There is a no strike pledge for U.S. military goods and passenger cruise vessels would not have been affected. The ILA had not gone on strike since 1977.
Potential West Coast Impact
A prolonged shutdown could affect West Coast ports, eventually leading to capacity and empty container shortages.
A potential strike would come at a challenging time for ocean supply chains, which already have faced significant disruptions with the drought in the Panama Canal, the Baltimore Bridge collapse, and the Red Sea conflict. There is talk of West Coast workers being unwilling to unload cargo originally bound for the East Coast and a worst-case scenario if the West Coast dock workers walked out in solidarity.
The Federal Maritime Commission (FMC) had warned carriers and operators against imposing excessive detention and demurrage fees during the strike, to protect shippers from unfair charges such as occurred during the pandemic-related port congestions.
CalChamber Position
The CalChamber believes a resolution to this negotiation is needed for the East Coast, and the nation as a whole. The CalChamber knows from recent history that any blip in the supply chain disrupts commerce, delays critical goods from reaching the market, and drives up costs for businesses and consumers.
