Looming strike could shut down ports
The move could cripple container cargo shipping along the East and Gulf coasts. Retailers are calling on President Obama to take action before the Sunday strike deadline.
Along with the fiscal cliff, there's another crucial and economically important deadline looming. A strike could shut down more than a dozen shipping container ports along the Eastern seaboard and the Gulf Coast.
The National Retail Federation, backed by scores of national and state associations, has been calling on President Obama to take action to ensure a possible walkout by the International Longshoremen's Association (ILA) doesn’t take place on Sunday.
At issue are terms of a new six-year contract between the longshoremen and the U.S. Maritime Alliance, which represents container carriers, port associations and other employers along the East and Gulf coasts. The longshoremen's union represents 14,500 workers at 14 ports.
Both sides have agreed to meet with federal mediators, who are staying closed-mouthed about whether there’s been any progress ahead of the contract extension that ends at midnight on Dec. 29.
In a letter to the president issued last week, the retail federation's vice president, Jonathan Gold, warned that "a strike of any kind at ports along the East and Gulf Coast could prove devastating for the U.S. economy, particularly considering the economic setback suffered by the ports, especially the Port of New York/New Jersey, as a result of Superstorm Sandy."
Gold also pointed to the recent, eight-day-long strike at the ports of Los Angeles and Long Beach in California by a different dockworker’s union -- as well as a similar, 10-day lockout in 2002 along West Coast ports -- to underscore the economic disruptions of any new walkout.
The 2002 strike, he said, cost the U.S. economy about $1 billion a day -- while retailers and port operations took months to recover from the disruption.
It also had "a profound impact" on the retailers, importers, manufacturers and other companies that rely on the ports every day, he wrote. An extended strike now could have a greater impact considering the fragile U.S. economy, he added.
At the heart of the labor dispute is the container royalty, a payment established in the 1960s when America’s shipping ports were transitioning from labor-intensive dock work to containerization and automated cargo systems. Employers are looking to limit those payments.
"The initial reason for implementing container royalties -- to protect ILA members from the loss of work -- has long been forgotten,” says the U.S. Maritime Alliance. "Unlike the Port of New York and New Jersey, then and now the predominant port on the East Coast, ILA workers at ports like Savannah and Charleston saw their job opportunities grow because of containerization. The container royalties they receive have been a bonus that has nothing to do with any adverse job impact caused by containerization."
But the union argues automation and containerization continue to reduce work hours for its members -- and the container royalty supplements are essential.
"ILA work isn't like other professions," says the union’s web site, "no ships mean no work, but employers depend on a strong and skilled workforce when ships need to be worked. Container Royalty helps keep an ILA workforce available."
An ILA strike would not affect military cargo, mail delivery or non-container cargo such as cars and some perishable items, according to the Associated Press.
Observers, meanwhile, say the dispute could lead to a sea change for both the shipping industry and labor unions.
"The shipping industry is trying to take back some of the power," economist John Husing told the Los Angeles Times, "but they are up against a union that has abnormal power for its size and one that is in a very strong position."
More from Money Now
Don't bother the POTUS with the cliff or the strike, he's on vacation...
Keep in mind the strike will impede export of US made goods and resources. It's not just imports that are impacted.
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