Negotiations between U.S. East and Gulf coast union dockworkers and their employers over a new master contract abruptly broke down Wednesday morning, leading to the cancellation of three days of scheduled talks this week.
The two sides had planned to participate in committee meetings in Delray Beach, Fla. this week to make progress on a new contract, with the existing one set to expire Sept. 30.
According to union officials, U.S. Maritime Alliance (USMX) Chairman and Chief Executive Officer James Capo told International Longshoreman’s Association President Harold Daggett early Wednesday morning that the employers would not cede ground on areas of terminal efficiency improvement that were previously discussed.
“He said they wouldn’t agree to anything else until we addressed the issue of inefficiencies,” ILA spokesman James McNamara told American Shipper
. “We have no idea what they mean about that. We’ve worked with them for decades and they’ve never taken this position. The proposals they made would gut any gain we’ve made in the past 30 years.”
The USMX, which represents terminal operators and shipping lines at U.S. East and Gulf coast ports from Maine to Texas, said the union is unwilling to discuss substantive compromise, and focused on inefficiencies at the Port of New York and New Jersey, the largest port at which ILA members work.
“USMX and its member companies are disappointed with the uncompromising stand the ILA leadership is taking in the negotiations,” Capo said in a statement. “The ILA’s posture is contrary to the history of cooperation that has characterized these negotiations in the past and, since 1977, has led to agreements without any disruption to the supply chain and port operations on the East and Gulf coasts.
“Management’s primary goal in these negotiations is to maintain the competitive position and market share of the ports by improving productivity and removing the inefficiencies that threaten the economic viability of the ports. For example, they include antiquated work rules that have made the Port of New York and New Jersey, which employs more ILA members than any of the 13 other East and Gulf Coast ports, the most expensive port in the world,” he added.
USMX further singled out the high costs of labor in New York/New Jersey.
“Unfortunately, the ILA leadership has been unwilling to have a meaningful discussion about these archaic practices, among them ‘low-show’ jobs that pay some ILA members for 24 hours of work even if they are only on the job for a few hours a day,” Capo said.
“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.”
In a statement late Wednesday, the ILA fired back.
“It is apparent to the International Longshoremen’s Association that the United States Maritime Alliance has spent more time writing press releases that it has in engaging in meaningful bargaining,” the union said. “Its latest journalistic salvo fails to mention that the wages and benefits that ILA longshore workers enjoy are the result of years of give-and-take in collective bargaining. USMX’s tactic of presenting averages for wages and benefits without explaining how these averages were derived are meant to inflame the general public who has no knowledge of the longshore industry. USMX uses this incomplete picture to distort the wage and benefits structure.”
The union explained in the statement that the 24-hour pay provision was meant to ensure longshoremen who were called for work were paid even if a vessel didn’t show up.
“Early on, the ILA negotiated a guarantee of a day’s pay,” the union said. “Otherwise, the employer had no obligation to pay if a vessel did not arrive on schedule.”
More broadly, the union said its hard-fought pay levels and benefits stem from its work since the advent of containerization to ensure employment for its members. It also disputed the notion that the container weight royalties are bonuses.
“When containerization started the ILA was faced with a huge displacement of workers whose jobs were eliminated by the ominous steel boxes,” the statement said. “The ILA was at a crossroad - allow containerization to be implemented or refuse. The ILA agreed to allow containerization to flourish but negotiated a fee based on the weight of each loaded container to be used for annual payments to the longshore workers whose job opportunities had been compromised due to containerization. As the number of containers being handled increased, the negotiated payment for each worker increased. Rather than being an annual bonus for each worker, as USMX suggests, this payment is compensation for the job opportunities lost by permitting containerization.”
The divide between the two sides has suddenly ripped wide open after weeks of negotiations that appeared to be gradually heading in a positive direction. Daggett reportedly told other media outlets that a strike appeared likely. Last month, the two sides had come to an apparent resolution on two of the sticking points in negotiations – chassis repair and automation of terminals.
It’s not clear if those are the precise items that the ILA contends the USMX retracted on Wednesday morning.
The ILA has asked the employers to submit a proposal in early September for consideration by the full union.
“But if it’s anything like what they presented, I can’t see this going anywhere,” McNamara said.
Either way, the impasse comes at a perilous time, with just more than a month to go for the two sides to avoid the first work stoppage at ILA ports since the 1970s.
“The deadline comes at a precarious position – 30 days or so before the election,” said National Industrial Transportation League Executive Vice President Pater Gatti. “The stakes are high.”
Gatti said the somewhat unexpected breakdown in talks will be taken seriously by shippers.
“It’s certainly not welcome news,” he said. “Contingency planning becomes more heightened in this atmosphere. Prudence dictates having a backup plan. The problem with contingency plans is that it locks you into a system that may build additional cost into your supply chain. There are costs associated with contingency planning. But it’s sort of like insurance. If you don’t have it and a development occurs, you’ll need it.”
Gatti said the disruption to supply chains from a work stoppage could spread beyond the ports directly affected.
“There could be an impact of shifting patterns on lanes that don’t even touch the ports,” he said. “It’s a systemic transportation system. Any event will have a ripple effect on the entire system. Just because you divert (to other ports), doesn’t mean your cargo will be flow smoothly.”
research has shown throughout the summer that shippers are wary of a work stoppage, with less than a quarter of shippers and logistics companies saying they aren’t planning to divert any cargo to avoid a potential action.
The two sides have been down this contentious road before. In late May Daggett wrote a letter to the ILA’s wage scale committee reiterating his stance that the union would stand firm on job preservation in the face of terminal automation.
On June 1, Capo accused Daggett and the ILA of failing to bargain in good faith. On June 5, Daggett accused Capo of trying to turn the union membership against him through divide and conquer tactics.
Indeed, it was a speech by Daggett at an industry conference in Long Beach in March that set the contentious atmosphere in motion.
But the apparent progress made over the summer has been stunted mere weeks before the deadline for a new contract. Optimistically, Gatti said there's still enough time.
“I’m not disputing what was said, but I don’t put too much into this yet," he said. "There’s a process that goes on in these negotiations. Six weeks is a long period of time for this thing to shift around. People need to stay closely attuned to developments. You can’t put these continegency plans in overnight.” - Eric Johnson