The International Longshoremen's Association (ILA) and the employers of their members, represented by the U.S. Maritime Alliance (USMX), have agreed to extend their contract 30 days, averting a potential strike at U.S. East and Gulf Coast ports that could have begun as soon as Sunday.
George H. Cohen, director of the U.S. Federal Mediation and Conciliation Service, made the announcement Friday morning
, saying "the container royalty payment issue has been agreed upon in principle by the parties, subject to achieving an overall collective bargaining agreement."
Friday afternoon, USMX sent out an addendum to the announcement saying that "in view of the year-end holiday season, USMX and the ILA have agreed that the extension of the Master Contract shall end on Wednesday, Feb. 6, 2013.
Cohen said that during the next month the ILA and USMX "shall negotiate all remaining outstanding master agreement issues, including those relating to New York and New Jersey. The negotiation schedule shall be set by the FMCS after consultation with the parties."
The agreement keeps open 14 container ports that would have closed on Sunday without an extension. The two sides have been trying to negotiate a new contract for much of the year and had avoided a work stoppage at the end of September by agreeing to a 90-day contact extension.
Cohen said "Given that negotiations will be continuing and consistent with the agency's commitment of confidentiality to the parties, FMCS shall not
disclose the substance of the container royalty payment agreement.
"What I can report is that the agreement on this important subject represents a major positive step toward achieving an overall collective bargaining agreement. While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the upcoming 30-day extension period," he said.
Container royalties are payments above and beyond salaries that workers receive. They are based on the weight of containerized cargo that moves through the ports. They ILA said these payments amount to $4.85 per ton of containerized cargo which is distributed to ILA workers as part of a wage supplement and to the ILA members' health care fund, called MILA.
Container royalties amounted to $211 million in 2011.
ILA had contended the royalties are "compensation for the job opportunities lost by permitting containerization" and in a statement issued earlier this month claimed royalties were “more important today for ILA members than it’s ever been to keep America's commerce moving with skilled, trained longshore workers.”
USMX said, however, "the initial reason for implementing container royalties – to protect ILA members from the loss of work – has long been forgotten. Today, thousands of workers who were not even born in 1960 – or in 1968 when container royalties were first distributed – continue to receive payments that in 2011 averaged $15,500 for ILA workers at the 14 East and Gulf coast ports."
Cohen thanked both parties "especially ILA President Harold Daggett and USMX Chairman & CEO James Capo, for their ongoing adherence to the collective bargaining process, which has enabled them to avoid the imminent deadline for a work stoppage that could have economically disruptive nationwide implications."
Many shippers are also relieved for the 30-day extension.
“While a contract extension does not provide the level of certainty that retailers and other industries were looking for, it is a much better result than an East and Gulf Coast port strike that would have shut down 14 container ports from Maine to Texas," said National Retail Federation President and CEO Matthew Shay, in a statement.
“A coast-wide port shutdown is not an option. It would have severe economic ramifications for the local, national and even global economies and wreak havoc on the supply chain," he added.
Kelly Kolb, vice president for government affairs for the Retail Industry Leaders Association, said her organization "will continue to closely monitor the progress of negotiations and strongly urges the parties to reach a long-term agreement as soon as possible in order to remove the threat of a devastating work stoppage at the East and Gulf coast ports.”
Joseph C. Curto, president of the New York Shipping Association, whose members include ocean carriers and terminals, applauded the decision to avert a strike and keep bargaining.
"A strike at this point in time will be costly and damaging to both the regional economy and to thousands of workers who depend on port activities for their livelihood," he said. "Also, I believe a strike would likely make it difficult to address the issues that are important to the Port of New York and New Jersey. The New York Shipping Association is looking forward to getting to the table to begin serious bargaining on the local agreement and to start the process of change.” - Chris Dupin