Back in October, I covered the East and Gulf Coast Port Strike. Even then, we knew there would be a part 2, even if it was delayed for a while. But now we know the end of the story.
The International Longshoremen’s Association (ILA) represents 85,000 port workers, 45,000 of which - the dock workers specifically - went on strike in 2024. Operations at 36 ports were affected by the strike, costing the U.S. economy $3.8 - 5 Billion per day.
The strike was mercifully short, lasting from midnight on October 1st through the 3rd when a temporary agreement was put in place, scheduled to last until January 15th. The week before the extension ran out, a deal was agreed to by the ILA and the United States Maritime Alliance (USMX), representing container carriers, direct employers, and port associations serving the East and Gulf Coasts.
A new contract was ratified on February 25th by ILA membership and on March 11th it will be signed by the USMX and ILA. This new deal runs through September 30, 2030, with benefits backdated to October 2024. Worth an estimated $35 Billion, this contract has double the value of the last multi-year deal, which was valued at $18M.
In this episode of Art of Supply, I look into the major factors at play in this negotiation and how each played out in the final deal.
Efficiency v. Staffing
The ILA and their members have been fighting against labor-reducing changes for decades. In the 1950s, shipping containers entered use to increase the efficiency of floating and offloading ships.
By the 1960s, the use of shipping containers was pervasive enough that the ILA had negotiated container royalties into their contract to offset the reduced requirement for labor that came with the increased efficiency of loading and unloading the ships.
With the new contract, the cap will be lifted and royalties will be paid on the full tonnage. There are also benefits for the union. They will collect 10 percent dues on container royalties, in addition to the 0.9 percent they collect on regular income
Full v. Semi Automated
The ILA defines full automation as “devoid of human interaction.”
Per the contract, no ports and no individual pieces of equipment can be fully automated. Instead there are definitions of allowable semi-automation, instances where efficiencies can be gained without eliminating jobs.
The contract allowscompanies to introduce some remote-operated cranes, saving time by avoiding the need for workers to climb in and out of equipment. Operators must be responsible for the movement of cranes, not just monitoring. At least one longshore worker
will handle each rail-mounted gantry crane (RMG), but the RMGs can be operated remotely - just not with one operator manning multiple cranes. Unlike RMGs, ship to shore cranes cannot be operated remotely.
And not all automation is physical. There are provisions in the contract to allow for automation (I read, in the form of software) that can improve operations and increase efficiency without impacting employment.
Payday in the Ports
Usually in union negotiations, the biggest concern is wage increases, but the ILA managed to secure a quick and impressive increase back in October when they signed the temporary agreement.
The union negotiated a 62 percent wage increase over the term of the contract, with junior members getting increased salaries to keep them on pace with the rest.
According to the Wall Street Journal, “The cost of moving a container across the docks—typically several hundred dollars—represents a fraction of the thousands of dollars importers pay to move a box from Asia to the U.S. East Coast. That means the extra labor expense is unlikely to be felt by most retailers and manufacturers, especially when that cost is divided among the hundreds or thousands of items typically held inside each box.”
The ILA contract that will be signed next week runs through 2030. The world is bound to be different in ways that we can’t imagine today when the time rolls back around for renegotiation.
The political landscape may have changed, the shape and scale of global supply chains will have shifted, and trends around organized labor are likely to be affected.
This story isn’t over until it is over on March 11th. Who knows… maybe there will be a part 3 of this series.
