ILA Strike: The Historical Roots and Current Impact
The International Longshoremen’s Association (ILA) faces a critical moment as its labor contract with the United States Maritime Alliance (USMX) is set to expire at the end of September 2023, potentially sparking a strike. The ILA represents over 70,000 dockworkers across 36 coastal ports in the U.S. and Canada, including major hubs like New York, New Jersey, Savannah, and Houston. If an agreement is not reached, the strike could begin on October 1, 2023, causing widespread disruption to the shipping industry and supply chains. This event echoes a long history of labor struggles, with key issues centering around wages, job security, and the threat of automation.
Background of the Negotiations
The current ILA-USMX negotiations began in February 2023, focusing on contentious topics such as wage increases and the use of automated technology at port terminals. ILA President Harold J. Daggett has been a staunch opponent of automation, which he views as a direct threat to dockworkers' jobs. He believes that USMX, including major shipping companies like Maersk, has violated the current labor agreement by using automated technology at terminals without union consent. Despite Maersk's claims of compliance, this accusation heightened tensions, leading to a suspension of negotiations in July 2023. Daggett has maintained that the ILA will strike if their demands, particularly regarding wages and job security, are not met. The ILA is demanding a wage increase to address inflation and the rising cost of living, while fiercely resisting any form of automation. On the other hand, USMX has emphasized its desire to avoid a strike, urging a return to the negotiating table. They have pointed out that the current contract prohibits the introduction of fully automated terminals without mutual agreement, and thus far, no breach of this agreement has occurred.
Core Issues: Wages and Automation
The two most significant issues in the current dispute are wages and automation. The ILA is seeking substantial wage increases, with reports indicating that they may be asking for as much as a 78% increase. However, Daggett has refuted these figures, clarifying that even a $5 hourly wage increase over a six-year contract would only amount to an average annual increase of about 10%. He has also accused USMX of making inadequate offers, given the substantial profits generated by the shipping companies. The issue of automation is equally critical. Daggett has made it clear that the ILA will not accept any automation that could lead to job losses, even semi-automated systems. This hardline stance reflects the broader labor movement's concerns about the future of work in industries where technological advancements threaten traditional labor roles. Many in the industry view the ILA’s opposition to automation as a potential rollback of earlier agreements, setting up a battle over the future of dockwork.
Political and Economic Implications
The potential strike has attracted the attention of the White House and various political figures, with shippers calling for federal intervention to prevent disruptions at major ports along the East and Gulf Coasts. The Biden administration has expressed a commitment to finding a resolution, but it has ruled out invoking the Taft-Hartley Act to force workers back to their jobs in the event of a strike. In recent comments, Transportation Secretary Pete Buttigieg acknowledged the gravity of the situation but emphasized that a resolution must be reached through negotiations between the ILA and USMX. A strike would have profound economic consequences, especially given the scale of the ILA’s reach. 43% to 49% of all U.S. imports flow through the East and Gulf Coast ports, and a strike would lead to significant delays and backlogs, particularly during the holiday shopping season. Steve Lamar, president of the American Association of Footwear and Apparel (AAFA), warned that a prolonged strike could create chaos in North America’s container supply chains, potentially causing lasting damage to these ports' business. Port executives, such as Beth Rooney, director of the Port Authority of New York and New Jersey, have already begun preparations for a potential work stoppage. This includes plans to manage cargo movements and prevent terminal pile-ups. With 147 vessels carrying over $34.3 billion worth of freight en route to the East Coast and Gulf ports by October 1, the economic stakes are immense.
Support from the ILWU
The ILA is not facing this struggle alone. The International Longshore and Warehouse Union (ILWU), which represents West Coast dockworkers, has expressed its full support for the ILA’s position. ILWU International President Willie Adams has pledged solidarity, emphasizing the unions' shared opposition to automation and determination to protect dockworker jobs. The support from the ILWU, whose own contract remains in place until 2028, strengthens the ILA’s bargaining position. The last time the ILA went on strike was in 1977, and a new strike would be the first multicoast labor action in over four decades. The consequences of such a strike would ripple through the U.S. economy, causing disruptions in supply chains that could take months to resolve.
Strategic Responses from the Shipping Industry
In anticipation of a potential strike, many shipping companies and port authorities are already taking steps to mitigate the impact. For example, some ocean carriers have begun embargoing export cargo to East Coast ports from the Midwest to prevent further congestion. Ports like Houston and New York/New Jersey have developed contingency plans, which include extended gate hours and efforts to clear cargo before the October 1 deadline. Long Beach Port in California has reported an uptick in freight, suggesting that some businesses are diverting shipments to the West Coast to avoid potential disruptions. Many transport companies are also adjusting their operations to prepare for the strike. Some are using transloading techniques, moving containers from West Coast ports via rail and trucks to the East Coast, while others are relying on airfreight as a more expensive but faster alternative for time-sensitive goods.
Recommended by LinkedIn
The Road Ahead
As the deadline looms, the ILA’s determination to strike unless their demands are met suggests that the U.S. shipping industry is facing a significant challenge. The implications of a strike extend beyond just the ports and shipping companies; industries that depend on a smooth flow of goods, including retail, automotive, and agriculture, will likely be severely impacted. Agricultural exporters, in particular, could suffer heavy losses if their products rot on the docks or are delayed in transit. The stakes are high for both the union and the shipping industry. A strike would have widespread economic consequences, potentially disrupting supply chains and costing billions of dollars. With automation, wages, and job security at the heart of the dispute, the ILA is determined to secure a deal that protects its members in the face of technological change. The outcome of these negotiations will not only shape the future of the ILA but could also set a precedent for other labor unions in the transportation and logistics sectors. If a strike occurs, it will be the first multi-coast action since 1977, and its impact on the U.S. economy could be significant.
Need Help Navigating the Current Freight Market?
– The CargoTrans Team
Have you met Captain?
Our End-to-End Visibility Platform
Visibility done right so that you can manage compliance, budget and expectations. Empowering you to confidently control your supply chain and deliver happiness to your customers.