The deadline for contract re-negotiations between the US East Coast dock workers and the terminal owners is approaching. Consequently, the threats of strikes is increasing. Shippers are becoming nervous.  

Formal negotiations between the International Longshoreman Association (ILA) and the employers organisation, the United States Maritime Alliance, started last year, however they appeared to have broken-down quite quickly with the leader of the ILA, Harold Daggett, giving a forthright speech in the summer revelling in a cover of a trade magazine that declared he was “ready for war”.   

This sort of rhetoric is probably to be expected from a trade union leader. Harold Daggett has been the leader of the ILA for several decades and is experienced in managing the expectations of his membership. However, there is pressure on him to deliver a substantial improvement of pay and conditions after the workers at the West Coast terminals negotiated a 35% wage increase. Yet there is uncertainty around how far Mr Daggett can go. The trade unions on the West Coast came under considerable pressure from the administration of President Joe Biden to come to agreement, with direct intervention by the Whitehouse in the negotiations. However, the political context is different at present, with election campaigns for the American Presidency effectively already having started. Putting pressure on the two sides may be more difficult.  

This has led to some shippers expressing concern over the effects of any disruption at East Coast ports. For example, the American Apparel & Footwear Association has just sent a letter to President Biden stating that “more than half of all apparel/footwear/accessories move through U.S. East Coast ports. AAFA members are already experiencing significant supply chain challenges including those caused by the Panama Canal drought and Red Sea security crises. Any slowdown at the U.S. East Coast ports will cause significant delays, drive up costs, and further fuel inflation”.  

There is speculation that shippers are looking to anticipate the effects of any disruption by importing additional inventory into the US earlier than normal, however doing this on a large-scale would have significant impacts on logistics resources such as warehousing.  

The ‘master contract’ between the ILA and the United States Maritime Alliance is set to expire at the end of September. It is probable that there needs to be an agreement between the two sides before that date. Therefore, the period of maximum friction is likely to be approaching.

Author: Thomas Cullen

Source: Ti Insight

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