Since East and Gulf Coast port dock workers officially went on strike earlier this week, both parties—the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) are continuing to make the case for their respective positions, in terms of what led to the work stoppage and what it will take to get a deal done.
USMX said on October 1 that it is proud of the wages and benefits it offers to its 25,000 ILA employees, and strongly supports a collective bargaining process that allows it to fully bargain wages, benefits, technology, and ensures the safety of its workers on a daily basis.
“Our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy running,” said USMX. “We look forward to hearing from the Union about how we can return to the table and actually bargain, which is the only way to reach a resolution.”
ILA officials did not hold any punches in calling out the USMX, saying that USMX is distorting facts and misleading the public, stating that it rejected the nearly 50% wage increase, because it does not adequately meet its members demands.
“They might claim a significant increase, but they conveniently omit that many of our members are operating multi-million-dollar container-handling equipment for a mere $20 an hour,” it said. “In some states, the minimum wage is already $15. Furthermore, our members endure a grueling six-year wage progression before they can even reach the top wage tier, regardless of how many hours they work or the effort they put in.”
ILA said it is seeking more than a $5 hourly wage increase.
What’s more, ILA stated that it has been fully prepared to negotiate a new deal going back two years before the expiration of the deal this week, saying that the last offer made by USMX was in February 2023.
“The wage increases in the previous contract were rendered meaningless by rising inflation,” it said. “Meanwhile, foreign-owned ocean carriers continue to make record profits, imposing outrageous surcharges on consumers and customers, yet they balk at the idea of sharing these profits fairly with the ILA. Furthermore, the ILA is steadfastly against any form of automation—full or semi—that replaces jobs or historical work functions. We will not accept the loss of work and livelihood for our members due to automation. Our position is clear: the preservation of jobs and historical work functions is non-negotiable.”
ILA also cited Container Royalty as a “critical issue,” explaining that those funds were intended to be a wage supplement paid out to its members and not be shared with employers, and it is demanding 100% of its Container Royalty monies, as well as other jurisdictional demands.
On October 2, USMX reiterated that its focus is on ratifying a new Master Contract, addressing the critical issues the parties need to bargain, with a caveat.
“Reaching an agreement will require negotiating—and our full focus is on how to return to the table to further discuss these vital components, many of which are intertwined,” it said. “We cannot agree to preconditions to return to bargaining—but we remain committed to bargaining in good faith to address the ILA’s demands and USMX’s concerns.”
A research note issued earlier today by TD Cowen analyst Jason Seidl, regarding a call his firm hosted with executives close to the port strike, indicated that progress is being made.
“Our panelist is hearing that that the strike will likely only last one week and could be resolved by Monday,” wrote Seidl. “Both sides appear to have come into agreement on the automation piece (a significant milestone in our view), and now the focus of the negotiations remains on wages. Importers pulled a lot of freight forward and to the West Coast ahead of the strike, so a strike for up to a week would be digested with only short-term impacts. Any strike that goes on for more than a week would create much larger challenges and would be very disruptive to the overall supply chain. Ocean carriers are putting on $1K-$3K surcharges per FEU which may stick in the medium term. Dray providers will likely put surcharges equivalent to 10%-15% off the base rate. The most logical diversions will be to LA/LB (which has ample capacity) and a longer-term strike could see some diversions to Halifax.”
Data from Chicago-based project44 observed that some shippers estimate that for every one week of an ILA strike, it will take 4-6 weeks to fully recover and could cost the economy up to $5 billion per day.
“Just three days into the strike, it will likely take over a month to recover,” it said.
“New York will likely see the highest number of anchored vessels as a result of the 40 vessels currently enroute to that port, but with over 100 vessels inbound to striking ports, congestion will be widespread. Ocean carriers are beginning to discharge containers destined for striking ports in order to transship onto smaller vessels. This will mitigate schedule disruptions on some of the larger vessels in the fleet. The Port of Freemont in the Bahamas is seeing the most volume.”
