Container Shortages, Record Freight Rates, & Fees, Oh My!

Automation Might Make ILA USMX Negotiations Contentious

The present East and Gulf Coast labor contract between the Worldwide Longshore Affiliation (ILA) and the United States Maritime Alliance, Ltd. (USMX) expires subsequent 12 months. Whereas shippers and the remainder of the availability chain are hoping for clean–even early–negotiations, a information story this week highlights a difficulty of rivalry between the events.

The ILA hit the Port of Charleston with a shock labor slowdown on Friday that brought on the port to increase gate hours this week to deal with the outcomes reported Reynolds Hutchins within the Journal of Commerce (JOC):

The work slowdown on the Wando terminal was orchestrated by the Worldwide Longshoremen’s Affiliation native mechanics union in response to a brand new automated gate system that was applied on the terminal final summer time and is within the very early phases of testing on the close by North Charleston terminal.

Final Friday, a day earlier than the port authority started testing the AGS expertise on the North Charleston Terminal, union employees refused to make use of the brand new automated gate system expertise at Wando Welch, forcing truck drivers to cease for handbook chassis inspections. The port authority instructed that by 2 native time the port authority had managed to clear the backlog of truck visitors that had mounted on the terminal, however apparently “points” could have remained.

Longshore unions within the U.S., each the ILA and Worldwide Longshore & Warehouse Union (ILWU), have lengthy fought laborious towards automation for the worry of shedding jobs. Whereas expertise strikes ahead and the unions have needed to make concessions, their combat has had its effectiveness.

U.S. ports are behind different ports world wide relating to modernization and utilization of recent expertise for effectivity. For one such instance, you possibly can take a look at this Flexport weblog evaluating the Port of Rotterdam to the Port of Oakland.

To be truthful, the Port of Rotterdam is among the most automated ports on the earth and is far bigger that the Port of Oakland, which is definitely not probably the most technologically superior and automatic port within the U.S. Nevertheless, the weblog does say “if the Port of Oakland have been to implement a contemporary stage of automation, 40-50% of the [port’s union jobs] could be eradicated.”

Whereas I feel that estimation is just too excessive, it does spotlight the longshoremen unions’ vested curiosity in preventing automation.

It’s no shock then that the JOC article above quoted goes on to say, “Automation at terminal gates has emerged as a high ILA concern.”

In fact, U.S. ports have a vested curiosity in automation to extend effectivity and combat port congestion, which has turn into a much bigger and larger downside in recent times with the mixture of provider alliances and bigger container ships considerably growing the quantity of transport containers arriving at ports at a single time.

The discount of seemingly extra widespread labor slowdowns and shutdowns on the ports additionally needs to be a horny advantage of automation to the ports’ administration.

Simply this month, a terminal on the Port of Oakland was shutdown as a result of tons of of union employees refused to just accept shifts in protest of President Donald Trump’s inauguration.

The ILA and ILWU are highly effective sufficient to sluggish and cease U.S. ports over political points or labor disputes as shippers effectively know.

Slowdowns and full out strikes to shutdown ports have lengthy been instruments utilized by the unions when it comes time to barter contracts. As a coverage, the unions don’t lengthen negotiate contracts early so as to protect these weapons of leverage.

I don’t must do a lot reminding of the 2014/2015 contentious contract negotiations between the ILWU and PMA that has everybody concerned within the provide chain urging the events to start out the subsequent negotiations lengthy earlier than the present contract expires.

When the labor slowdowns and retaliatory mini-lockouts of that labor strife brought on agricultural exports to rot on the docks and imports to by no means attain retailer cabinets for the vacation season, shippers seemed to maneuver their cargo via different ports.

At the moment, the USMX and ILA talked of opening contract negotiations lengthy earlier than subsequent 12 months’s expiration, sparking pleasure that there could also be change to the expensive manner issues are completed on the ports.

Nevertheless, motion towards that early negotiation has not occurred during the last couple years. Their discuss of early negotiations now feels extra like a seize at cargo market share.

Negotiations between the ILA and USMX on the East and Gulf Coasts has not been a lot better than the ILWU/PMA negotiations on the West Coast. The final time the ILA contract expired, the ILA scheduled a strike that threatened to close down ports round Christmas time in 2012.

Historical past and final week’s labor slowdown give shippers extra motive to anticipate contentious and expensive contract negotiations between the ILA and USMX subsequent 12 months slightly than a clean transition to a brand new or prolonged contract at East and Gulf Coast ports. Below the rivalry will probably be a combat over automation.

That automation combat may show very expensive for shippers and the U.S. financial system as an entire if the ILA and USMX don’t do higher than we’ve seen prior to now at coming to settlement.

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