The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) have reached an agreement to avert a strike that could have shut down the unloading of 14 container cargo at ports up and down the United States’ East Coast and the Gulf of Mexico, according to CNBC. The two parties will get 30 more days to resolve their differences, which have been ongoing since March. That would have marked the second such strike in about a month, after a labor dispute shut down the Ports of Los Angeles and Long Beach in late November. It would have also been the first time East Coast ports have shut down en masse in 35 years.
That’s great news for US businesses, which have also been under pressure from the so-called “fiscal cliff,” the tax and spending austerity measures that are due to kick in at the end of the year unless Washington reaches a compromise. The National Association of Manufacturers (NAM) estimated that a strike would cost US businesses $1 billion per day. And, it said, a strike now would have been particularly bad timing. “While there is no good time for a strike along our nation’s ports, the economic damage could be even more profound as we face the uncertainty of the fiscal cliff.” Investors fear that businesses have slashed investment in people and goods while the politicians wrangle. If the port workers do go on strike in a month, businesses should at least be facing less uncertainty by then, though Washington might still be arguing over details of the budget and debt ceiling.
The National Retail Federation quickly lauded the news. CEO Michael Shay said in a statement:
While a contract extension does not provide the level of certainty that retailers and other industries were looking for, it is a much better result than an East and Gulf Coast port strike that would have shut down 14 container ports from Maine to Texas. A coast-wide port shutdown is not an option. It would have severe economic ramifications for the local, national and even global economies and wreak havoc on the supply chain.
Workers had been protesting a new contract which would curtail the money they made from “container royalties”—payments based on the weight of cargo they move. Royalties have been part of worker compensation and union benefits since the 1960s, but USMX wants to phase them out altogether, beginning by cutting them back to $15,500 per worker year.
This is all part of attempts to make ports more efficient. US berths handle 24% fewer containers per hour for big ships than in Northeast Asian ports, 11% less than at European ports, and 18% less than at ports in the Middle East, yet workers are paid an average of $124,138 in wages and benefits. North American ports will face new competition for traffic once a wider Panama Canal is ready to handle even bigger ships in 2015.