Labor Dispute at East Coast Ports Could Lead to Potential Strike

The contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) is set to expire on September 30, 2012. The ILA represents longshoremen working along the East Coast ports. USMX represents 14 major East Coast and Gulf ports. The most recent news indicates that the two sides are far from an agreement on a new contract with ILA President Harold Daggett warning on August 22nd that “It looks like we’re going to have a strike.”

Those that were importing in 2003 will likely remember the strike that took place along West Coast ports. There are a few good lessons the shipping community can take from that difficult period.

  • No one could predict the length of the strike. If memory serves me correctly, it lasted about two to three weeks, but not more than a month. Don’t hold your breath waiting for government intervention. I know we are in an election year and politicians will definitely be speaking publicly about the labor dispute if a strike does take place. However importers and exporters can’t count on the government to take action beyond prodding the sides to negotiate.
  • In the early days of the strike carriers kept vessels that had arrived at their destination close to the ports. However as the strike went on, carriers started diverting vessels. Some vessels returned back to the origin port. Other vessels were diverted to a different foreign port (Mexico/Canada). In some cases, containers were actually unloaded in those foreign countries and returned at a much later date after the strike we over. If vessels started diverting containers in the case of an East Coast port strike, I’m not sure which ports the carriers would divert to.
  • I don’t remember carriers charging extra fees for storage or diversion back in 2003. However I have already seen one carrier (Hanjin Shipping) post in their tariff rules a special Port Congestion surcharge of $1000/40′. This surcharge is meant to be implemented if labor unrest (strikes, lock-outs, work stoppages, or slowdowns) result in any disruption of Hanjin operations. The amount of surcharge for the other size containers will be billed based on the standard formulas.
  • Containers that were already unloaded from the vessels. but were still inside the port location were unavailable to be picked up during the strike.
  • Once the strike was over, it took the carriers and ports a couple of weeks to recover.
    • The ports were heavily congested as there were many containers that were long overdue to be picked up.
    • The carriers had vessels all over the map. Some vessels were on the way back to the origin port. Others were still parked at the destination port. This caused havoc with vessel scheduling. We would see some carriers take two weeks to get a vessel back to a designated port.

If I can think of more lessons from my experience with the last strike, I will try to add them to this post. In the meantime, let’s hope that the two sides can agree on a new contract before September 30th.

-Jimmy Ting

jimmyting@great-world.com

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