U.S. East Maintains 3-Day Strike U.S. Longshoremen Get Pay Hike

On October 3, 2024, the International Longshoremen’s Association (ILA) and the U.S. Maritime Union (USMX) issued a joint statement that the parties have reached a tentative agreement on wages and have agreed to extend the Master Contract through January 15, 2025, with a subsequent return to the bargaining table to resolve other remaining issues. Effective immediately, all current strike activity will cease and all work covered by the Master Contract will resume.

Preliminary Agreement Elements:
Under the preliminary agreement, the ILA and USMX agreed to extend the master contract through January 15, 2025.USMX agreed to give the ILA a $4 per hour raise each year for six years, culminating in a 62% increase in wages for the International Longshoremen’s Association over six years.
Previously, the union had been insisting on a 77 percent raise, while the UAMX side offered a 50 percent raise on the eve of the strike.

With memories of the chaos and disorder at U.S. ports during the epidemic still fresh, and what was declared to be the largest U.S. port strike in 50 years, the strike was extremely well publicized and relatively well prepared and anticipated. Although the strike ended earlier than expected, the fallout from the strike was still intense.

Core disputes not yet resolved:
However, the core dispute surrounding port automation is still under negotiation.

In fact, the strike began when ILA announced that it had canceled negotiations with USMX for a prime contract after discovering that Maersk and Maersk Container Terminal (APMT) were using the Smart Gate system. The system was initially found to be in use at the Port of Mobile, Alabama, and was later reported to be in use at other ports as well.(The smart gate system eliminates the need for worker involvement and performs collection and human-machine interaction tasks such as automated weight collection, identification of box number shots, box shots, and identification of electronic license plates on container trucks passing through.)

However, in the hirer’s view, automation was enabled because U.S. ports have performed extremely poorly in terms of efficiency. And the reason for the inefficiency is that most shipping companies do not typically pay terminal operating fees at U.S. ports. As a result, any wage increase agreed to by the shipping company employer in contract negotiations will come directly out of the shipping company’s pocket. This means that this wage increase for workers will be borne by the shipping companies, directly driving up transportation costs.

How is the 3-day strike affecting the 60 containers backed up at sea?

This is the first strike by the International Longshoremen’s Association since 1977, affecting operations at 14 different ports. This week, 50,000 of the approximately 85,000 union members participated in the strike.
Despite the short duration of the work stoppage, a significant amount of container capacity has been piled up at sea, so there will still be some supply chain impact. The backlog will take weeks to clear as more ships arrive each day and queues will increase as the ILA unloads at the front of the line from Friday.
According to Linerlytica, as of Oct. 1, there was 346,185 TEU of container ship capacity waiting outside the U.S. East Coast and Gulf Coast.This is one of the key factors contributing to the global container ship capacity being impacted by port congestion, which currently stands at 2.8 million TEUs.

Since the port was closed for only three days, future freight rate increases should be reduced, but this does not mean that there will be no impact.
The rule of thumb is that for every day a port is closed, it takes about five to seven days for the supply chain to recover, which means that the already backlogged cargo will take about three weeks to process.
According to Lloyd’s List Intelligence’s Seasearcher vessel positioning data, as of the afternoon of Oct. 3, there were 60 container ships with a total capacity of 363,620 standard containers (TEUs) (including vessels at anchor or traveling at speeds of less than 5 knots) waiting outside U.S. East Coast and Gulf of Mexico ports.
The average capacity of the vessels in the queue is 6,060 TEUs; nine of these vessels have a capacity of more than 13,000 TEUs.

The largest number of waiting vessels is Mediterranean Shipping Company (MSC) with 13. Maersk has 9 and ZIM has 4.

The largest concentration of container ships is outside the New York/New Jersey ports with 11. The next largest concentration is outside the Port of Norfolk with 8 ships. There are 6 outside the Port of Savannah, 4 each outside the ports of Houston and Philadelphia, and 3 outside the Port of Charleston.

Florida ports, including the ports of Miami, Port Everglades, Jacksonville, Tampa and Palm Beach, had a total of 13 container ships, including several small feeder vessels.