A decision by the International Longshoremen's Association and U.S. Maritime Alliance to extend their collective bargaining agreement, which was due to expire at the end of this month, by 90 days until Dec. 29, was hailed by shipper groups.
George H. Cohen, director of the Federal Mediation and Conciliation, said in a press release issued Thursday the two sides "emphasized that they are doing so 'for the good of the country' to avoid any interruption in interstate commerce.
"This extension will provide the parties an opportunity to focus on the outstanding core issues in a deliberate manner apart from the pressure of an immediate deadline," he said.
"The negotiations on the Master Agreement will be conducted during the same time frame as negotiations for local agreements. The negotiations will continue under the auspices of the FMCS. Due to the sensitive nature of these high profile negotiations, we will have no further comment on the schedule for the negotiations, their location, or the substance of what takes place during those negotiations," Cohen added.
Shipper groups said they were pleased with the news, which pushes expiration of the contract - and any possible labor stoppage - from the peak shipping season to the winter doldrums.
Peter Gatti, executive vice president for the National Industrial Transporation League, said the nation’s largest shipper group was pleased the two sides “will move forward in a continuing effort to reach mutually acceptable terms on a new contract. It is vital for shippers to be able to rely on stable supply chains that are so vital for the nation’s economic wellbeing.”
He added, “It’s a reprieve, but they still have to get the deal done. I was a little surprised by the extension, but it is a good surprise.”
He said any resort to a strike or lockout would make it harder for the two sides to come together and the league did not want to see conditions forced on either side.
The Agriculture Transportation Coalition, which represents agriculture and forest product exporters, said a strike or other action “would cripple the economy.”
“Exports are key to our nation's economic recovery, and agriculture and forest products are the largest domestically produced export, and thus essential to any hope we have to restore jobs and growth,” the group said. “As we are currently in harvest season, the prospect of disruption to the export supply chain was particularly alarming.”
AgTC said “as the ILA and the marine terminal operators continue to negotiate, we ask them to work towards making U.S. ports the most efficient in the world, to review and address all factors necessary to enhance U.S. port productivity; our long term global competitiveness depends upon it."
“This extension should provide for a stable holiday shipping and shopping season over the next few months," said Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation.
However, he warned that, "Until a final contract is ratified, America's retail community will remain concerned."
Kelly Kolb, vice president for government affairs at the Retail Industry Leaders Association, also said "a 90-day extension is welcomed news for retailers because it ensures that a work stoppage at the ports will not interfere with the flow of goods during the critical holiday season.
“Ports play a critical role in the supply chain and a potential disruption would be harmful to the retail industry as it would lead to lost sales and aggravated customers," she said.
Some observers said the ILA and USMX appear to remain far apart and many difficult issues remain to be tackled.
“Both sides have recognized they still have a lot of outstanding issues and they really do need 90 days to get through it,” said one source. “There is some headway being made. Is there influence by the federal mediator? No doubt. But it is also a situation where both of them have flexed their wings a little bit and now they are ready finally to consummate something or at least head in that direction.
“Sure there was influence by the government, but the other side is that both of them have blinked, and there is a chance we will have some reality,” the souce said. He noted the two sides have agreed to hold off on discussions about wage guarantees and overtime - some of the thorniest issues USMX and ILA have to talk about - until the end of negotiations.
Another observer was skeptical about how much progress has been made in the negotiations to date, discounting an announcement the ILA and USMX issued in July that they had an “agreement in principle on two key issues, technology and ILA jurisdiction over chassis maintenance and repair.” That announcement had few details.
If management tries to reign in the big salaries that some ILA members make in the Port of New York and New Jersey as a result of overtime and guarantees, those negotiations could be particularly challenging.
Harold Daggett, president of the ILA, was formerly the head of a maintenance and repair local in the port, and some management and observers say that is source of some of his biggest support within the union.
USMX said in July “at the Port of New York and New Jersey, 34 ILA members make over $368,000 a year in wages and benefits; one of every three makes over $208,000 a year - not including annual bonuses based on the weight of container cargo. These 'container royalties' totaled $232 million in 2011 – or an average of $15,500 for ILA workers on the East and Gulf coasts.”
Another source interviewed by American Shipper
said six ILA members in New York earned more than $400,000 in 2011, averaging $463,833 in cash compensation before container royalties and another 28 more than $300,000, averaging $374,862.
Those big salaries have attracted the attention of both the Waterfront Commission of New York Harbor and the Port Authority of New York and New Jersey. - Chris Dupin