The latest news on the labor negotiations between the United States Maritime Alliance (USMX representing the East Coast & Gulf Port terminals and carriers) and the International Longshoremen’s Association (ILA) isn’t good. The contract deadline was pushed back three months ago. However the deadline of December 29, 2012 is less than ten days away and the contract negotiations seem to be at an impasse.
The Federal Mediation and Conciliation Service (FMCS) has been trying to mediate an agreement between the two parties for months. More recently, the FMCS has been trying to get both sides to agree on another short contract extension past the December 29th date. As of today, without any agreement in site, neither side has agreed to an extension. What is interesting is that both sides are blaming the other for not getting an extension past.
If you’re interested in getting into the nitty-gritty details, you can visit the websites of the respective sides:
Both sides are claiming that the other side rejected the extension.
I’m not here to take sides on the issue. My goal is to offer advice to the shipping (importing and exporting) community on how to deal with this labor dispute. From the looks of it, there is a decent chance that we may be heading for a strike on December 29th. The ILA has already authorized a strike if no agreement is reached.
Importers with goods coming to the East Coast and Gulf ports have the most to be worried about. Carriers are making planes to reroute containers if a strike does occur. As discovered during Hurricane Sandy and few weeks ago during the 8-day strike in Los Angeles/Long Beach, the carriers have the right to declare Force Majeure in such cases. If Force Majeure is declared, carriers will have no responsibility to move the goods any further than the diversion port. In some cases, importers will have to make arrangements to move the goods from the diversion port to the final destination. In other cases, importers may have to pay additional fees to the carrier in order for the carrier to move the goods to the original final destination. If the goods have not shipped out yet, now would be time to decide on moving the goods through a West Coast port or via Canada.
Importers with goods coming to the U.S. West Coast as well as onward to inland destinations via rail will also be impacted. We are not sure if space will get tight, but there is a distinct possibility as we expect a surge in shipments in the weeks leading up to the Chinese New Year (February 10, 2013). If space does get tight, we can also expect the carriers to be bolder with their attempts to increase ocean freight shipping rates.
The carriers have almost all announced a Port Congestion Surcharge ($1000 per 40′) to be implemented on all shipments coming the United States if a labor dispute does occur. This is a bottom line impact on all importers large and small.
Let’s all cross our fingers and hope that we’ll get a resolution in the coming days before December 29th.