ILA Strike Watch 2024: Cancelled Talks & Strike Threat Increase
The International Longshoremen’s Association (ILA) cancelled contract negotiations last week. Then the union said its threatened strike, which would start October 1st, is “more likely.”
That puts us here at Universal Cargo into full strike watch mode, much like we were a little over a decade ago. In 2012 and 2013, we regularly updated shippers with an ILA strike watch when the union threatened to strike, planned a strike, but postponed it, and eventually reached a new contract without striking. Even without the strike actually happening, there was some disruption from carriers diverting vessels to protect themselves and shipments from the threatened strike.
Hopefully, 2024 will only see the threat of a strike and not an actual one. An ILA strike would shut down U.S. East and Gulf Coast ports, disrupt supply chains around the world, and cost the U.S. economy billions of dollars (likely per day). Unfortunately, an actual ILA strike is looking more likely as we draw nearer to the September 30th expiration of the union’s master contract rather than less likely.
For more than half of a year, the ILA has said if it doesn’t have a new contract in place by the expiration of the current one, it will strike. In November, its president, Harold Daggett, told ILA members to prepare for a strike in October. From what I understand, it’s difficult to negotiate a new contract when one party refuses to meet at the negotiation table. And that’s what we’re seeing right now.
There are still a few months left to get a deal done before the ILA said it would strike, but the union cancelling talks is plenty to make shippers nervous. Let’s take a look at the most recent developments.
ILA Cancels Negotiations
At the beginning of last week, the ILA cancelled negotiations with the United States Maritime Alliance (USMX) for a new contract covering the dockworkers at the East and Gulf Coast ports.
Negotiations were set to begin on the following day – Tuesday, June 11th – when the ILA cancelled them.
Why?
ILA Claims Maersk Is Using Agreement-Violating Automation
In a Journal of Commerce (JOC) article, Michael Angell reports:
The ILA said in a statement that negotiations with the United States Maritime Alliance (USMX) scheduled to begin Tuesday have been canceled “after discovering that APM Terminals and Maersk Line are utilizing an Auto Gate system, which processes trucks without ILA labor.
However, Maersk denies that its Auto Gate system or unspecified technology projects, which the union also says go against agreement at the Port of Mobile, violate the ILA’s master contract. Some other industry experts believe the ILA is using alleged automation violation as an excuse to put pressure on Maersk and the rest of the members of the USMX to gain leverage for the union’s high wage demands.
Peter Tirschwell implies as much in a JOC article that was published just today:
The union has thus ratcheted up pressure on the ocean carriers that dominate the United States Maritime Alliance (USMX), the employer group, to agree to robust wage increases the union feels it’s entitled to given the all-time high profits earned by container lines during the pandemic.
Although the ILA’s rationale for calling off future talks was its allegation that APM Terminals in Mobile utilized technology in violation of the current contract, a charge APMT rejected, the fate of the negotiations will hang on wages.
Of course, the union used strong language in regards to Maersk’s Auto Gate system, as quoted in Angell’s article:
“This system, initially identified at the Port of Mobile, Alabama, is reportedly being used in other ports as well,” the ILA said. “This is a clear violation of our agreement with the USMX, and we will not tolerate it any longer.”
Reportedly, the Port of Mobile location is the only place where local negotiations necessary for the coast-wide ILA negotiations did not come to a successful conclusion. Such local negotiations were supposed to be completed a month ago, by May 17th.
Automation Always Sticking Point, But…
Automation is always a point of contention between the dockworker unions and employers at the ports. For years, the unions have fought against automation. That is not surprising. They see it as an existential issue: automation threatens to replace workers at the ports.
As a result, U.S. ports have fallen behind major ports around the world in terms of automation and efficiency. That became a particular problem when demand was artificially ballooned by lockdowns and stimulus checks during the pandemic. Ports were not able to handle the container volumes of the resulting shipping boom, playing a major role in the port congestion of the “supply chain crisis” that ensued.
However, before the ILA even touches tough issues like automation in its new master contract, it wants high wage increases agreed to for its members. Carriers made a great deal of money during the shipping boom, and the ILA thinks it should get handsomely rewarded for that, no matter how profits have played out since then or are projected to perform in the future.
In fact, the ILA goes so far as to claim responsibility for the high profits carrier members of the USMX made during the shipping boom:
“The union views this current Master Contract negotiations with (USMX) as a pivotal moment for them, knowing that the member companies who employ ILA labor have made massive profits in recent years, while failing to reward the workforce responsible for these gains,” the ILA said in a statement on June 12.
–Tirschwell’s JOC article
Dockworkers certainly had a great deal of work to do during the shipping boom. And they were definitely needed, as they always are, to keep the ports operating through it all. However, they were not responsible for the higher gains carriers made at the time.
It was poor government policy in response to the pandemic that artificially inflated demand, shooting freight rates way up. The only factor the union played in that was its aforementioned fight against automation, which increased port congestion and created additional upward pressure on freight rates. But most would argue that’s more of a negative thing than a positive one.
Personally, I would think union members are deserving of a bonus for their hard work through the shipping boom. However, the union’s argument sounds arrogant to me, let alone the fact that it’s false. The high demands it’s making combined with its willingness to apply pressure by cancelling talks is enough to make shippers rightfully nervous. Ultimately, demands like the following quoted in Tirschwell’s article are borderline outrageous:
“When negotiations resume, the union expects to demand salaries and other benefits for ILA members that are as lucrative as the profits of USMX member companies,” the union said. “The threat of a coast-wide strike on Oct. 1, 2024, is becoming more likely.”
Thus, we all have to be in full alert mode for a potential ILA strike, the likes of which hasn’t been seen in half a century.
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