With one week remaining until the expiration of the tentative agreement between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance, there is a fair amount of uncertainty about what could be coming next.
As previously reported by LM, ILA and USMX resumed Master Contract discussions in November, “to discuss all outstanding issues to reach a new contract,” in advance of a January 15, 2025 deadline for a new deal. This followed a brief three-day strike on October 1, after the expiration of their previous six-year contract, which resulted in 36 East and Gulf Coast ports, stretching from Maine to Texas, going on strike for the first time since 1977.
ILA and USMX resumed Master Contract discussions in November, “to discuss all outstanding issues to reach a new contract,” in advance of a January 15, 2025 deadline for a new deal.
USMX said, at the time, that there was positive progress on a number of issues, but they were unable to make significant progress on discussions focusing on a range of technology issues.
“Unfortunately, the ILA is insisting on an agreement that would move our industry backward by restricting future use of technology that has existed in some of our ports for nearly two decades—making it impossible to evolve to meet the nation’s future supply chain demands,” said USMX.
The ILA countered, saying that for the first day and a half of meetings last month, discussions were productive, and both sides engaged in addressing serious issues but talks subsequently broke down when management introduced their intent to implement semi-automation, which ILA labeled “a direct contradiction to their opening statement where they assured us that neither full nor semi-automation would be on the table.”
ILA added that USMX claimed their focus was on modernization, not automation. And it added that ILA has always supported modernization when it leads to increased volumes and efficiency.
While the parties were set to meet on January 7, CNBC reported a secret meeting was held on January 6.
The report said that sources told CNBC that the talks mainly focused on refining language related to automation, with the aim of simplifying discussions when formal negotiations resumed on January 7. One key proposal, according to the report, was to allow the ILA to bring in union workers to support any new automated technologies, alongside a mutual commitment to adopting technologies that enhance operational efficiency and productivity. However, the proposal also raised concerns for the USMX about the potential for higher labor costs and the need to justify the creation of new jobs as automation is introduced at ports.
The possibility of a prolonged port stoppage is something shippers have ostensibly preparing for, based on analysis from industry observers.
Barring some significant progress during negotiations, Everstream Analytics assesses that the most likely scenario remains another full-scale strike at all east and gulf coast ports from January 16.
Miro Woitzik, Global Director of Intelligence, for Everstream Analytics, said the firm’s clients have mainly opted for a combination of various solutions, including:
- pulling forward critical orders to arrive at U.S. Gulf and East Coast ports before January 15;
- discharging critical orders from Asia at West Coast ports and move them via rail or truck on the final leg;
- reverting to air cargo for time sensitive shipments that would not have made the cut-off date to arrive before January 15; and
- delaying non-critical orders for a few weeks to avoid having containers stuck at congested ports in the case of a strike
“Everstream Analytics’ data of container ships arriving at U.S. East and Gulf Coast ports show a surge of ship arrivals in the weeks after the last port strike and right before Christmas, with more than 400 ships calling on the East and Gulf Coast ports,” he said. “This is about 10% higher than the yearly average. This situation is similar to the weeks leading up to the October port strike, which also saw a significant increase of about 10-15% in vessel arrivals.”
And David Kamran, Assistant Vice President, Moody’s Ratings, explained that a failure to reach an agreement and an extended strike similar to the one seen in West Coast ports in 2002 would begin to have a material financial effect on East and Gulf Coast ports.
“Operator ports, which generate revenue based on cargo volumes, are most at risk,” he said. “An extended strike would not only have an adverse effect on ports but could also impact the retail sector and shipping companies. Outstanding issues include marine terminal automation, healthcare, and container royalties, among others, and industry stakeholders have already started to adjust trading in anticipation of a potential strike.”
From a shippers’ perspective, John Donigian, Senior Director of Supply Chain Strategy at Moody’s, explained they must act now to prepare for potential disruptions by evaluating logistics networks, identifying alternative routes, and developing contingency plans.
“The potential strike highlights deeper vulnerabilities in supply chains,” he said. “By addressing immediate challenges and pursuing long-term solutions, businesses, unions, and port operators can strengthen the resilience and competitiveness of global trade networks for the future.”
Last month, President-elect Donald Trump threw his support behind labor and the ILA.
In a post on his Truth Social network, Trump said: “There has been a lot of discussion having to do with “automation” on United States docks,” wrote Trump. “I’ve studied automation, and know just about everything there is to know about it. The amount of money saved is nowhere near the distress, hurt, and harm it causes for American Workers, in this case, our Longshoremen. Foreign companies have made a fortune in the U.S. by giving them access to our markets. They shouldn’t be looking for every last penny knowing how many families are hurt. They’ve got record profits, and I’d rather these foreign companies spend it on the great men and women on our docks, than machinery, which is expensive, and which will constantly have to be replaced. In the end, there’s no gain for them, and I hope that they will understand how important an issue this is for me. For the great privilege of accessing our markets, these foreign companies should hire our incredible American Workers, instead of laying them off, and sending those profits back to foreign countries. It is time to put AMERICA FIRST!”
From an ocean carrier perspective, Maersk said in a customer advisory that it strongly encourages its customers to pick up their laden containers and return empty containers at U.S. East and Gulf Coast ports before January 15.
“This proactive measure will help mitigate any potential disruptions at the terminals,” said Maersk.
