National Retail Federation calls on ILA, USMX to resolve differences

In a letter to ILA President Harold Daggett and USMX Chairman and CEO James Capo, NRF President and CEO Matthew Shay said that the NRF is urging both parties to immediately resume contract negotiations, with the September 30 deadline creeping up.

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The ongoing stalemate in labor negotiations between the International Longshoremen’s Association (ILA), the largest union of maritime workers in North America, and the United States Maritime Alliance (USMX), an alliance of container carriers, direct employers, and port associations serving United States-based East and Gulf Coasts, has garnered increased attention from the National Retail Federation (NRF).

In a letter to ILA President Harold Daggett and USMX Chairman and CEO James Capo, NRF President and CEO Matthew Shay said that the NRF is urging both parties to immediately resume contract negotiations, with the September 30 deadline creeping up.

On August 22, negotiations between ILA and USMX dissolved, following July meetings, which ostensibly pointed to positive progress being made, when they announced agreements in principle on issues having to do with the introduction of new technology and automation and maintenance and repair of chassis within marine terminals and at off-pier facilities at the East and Gulf Coast ports.

But based on last week’s events, it appears that an actual deal remains far from reality at this point.

And with Peak Season on the near-term horizon, Shay said in his letter that retail shippers are facing a critical time, with some retailers having already enacted a contingency plan to ensure holiday merchandise will reach stores in time.

“These moves have been undertaken because of the perceived risk of supply chain disruptions,” said Shay. “Now that there is a real risk of disruption, most retailers using the East and Gulf Coast ports will be forced to execute contingency plans within the next week to meet in-store holiday deadlines. These contingency plans carry a great expense but they are necessary to avoid disruptions that will add costly delays to our members’ supply chains as well as other importers and exporters who rely on East and Gulf Coast maritime facilities.” 

Concerns remain heightened, due to the ten-day 2002 alongshore contract dispute on the West Coast, which some estimates indicate cost the U.S. economy several billion dollars per day and negatively impacted various key sectors within the economy.

NRF Vice President for Supply Chain and Customs Policy Jon Gold said in an interview that he is hopeful ILA and USMX will resume negotiations by the September 30 deadline or soon thereafter.

“From our perspective, having a strike or shutdown would not do anybody any good from a port, shipper, importer or exporter perspective,” he said. “Shippers are making their final decisions in the next week to ten days regarding their Peak Season shipping plans and unfortunately all of these decisions come with an increase in costs. The West Coast shutdown costs the U.S. economy about $1 billion per day for ten days, and it took six months to recover from it.”

Gold said if things remain unresolved NRF members need to take whatever steps are needed to get their merchandise on store shelves in time for holiday shopping. That may require re-routing freight through the West Coast or Canadian-based ports, or using air cargo, among other options.

A major sticking point in the negotiations between the ILA and USMX has to do with how the ILA has to negotiate all Master Contract issues with the ILA Wage Scale Committee, which ILA President Harold Daggett said in a letter to USMX’ Capo is a democratically-elected committee that Capo has declined to address despite Daggett’s overtures to do so.

Another issue has to do with technology. USMX’ Capo maintains that the ILA is demanding that management guarantee a job for any worker even if new technologies eliminate a need for that position. Capo also noted that the current Collective Bargaining Agreement mandates that both sides negotiate over the impact new technology might have on the work force.

And Capo also explained that the possibility of chassis pool operators joining USMX and be bound to the Master Contract, as per the ILA’s request, would be “impossible” to achieve as the USMX cannot legally force pool operations to do so.

The ILA is also requesting that all import containers be weighed at the pier before being released to assure that ILA funds are not shortchanged monies and help to save lives as the ILA has lost 14 members in the last year due to workplace fatalities. While the ILA admitted this would reduce port productivity it stressed that productivity can never trump safety. USMX contends that weighing containers would create more unneeded work, add unnecessary expense and increase congestion at the ports.

After negotiations broke down last week, Capo said the ILA’s posture is contrary to the history of cooperation that has characterized these negotiations in the past and, since 1977, has led to agreements without any disruption to the supply chain and port operations on the East and Gulf coasts.”

Capo added that USMX’ objective in negotiations is to maintain the competitive position and market share of the ports by improving productivity and removing the inefficiencies that threaten the economic vitality of the ports.

Capo said that USMX’ objective in negotiations is to maintain the competitive position and market share of the ports by improving productivity and removing the inefficiencies that threaten the economic vitality of the ports.

What’s more, he noted that ILA leadership has been “unwilling” to have a meaningful discussion about antiquated work ruled it employs—including “low-show” jobs that pay some ILA members for 24 hours of work even if they are on the job for a few hours in a day.

ILA workers, explained Capo, on average earn $124,138 a year in wages and benefits, along with an average hourly wage of $50, which is more than double the $23.19 average for all U.S. union workers in addition to paying no premiums and minimal co-pays and deductibles for a healthcare plan that is better than most U.S. employers provide their workers.

The ILA responded in kind late last week, explaining it is discouraged by the “take it or leave it” approach by USMX last week. Daggett said that the ILA has seen tremendous support from other unions, including the West Coast long shore union, the International Longshore and Warehouse Union, and the Inernational Transport Workers Federation, and the International Dockers Association.

And it also provided a rebuttal to USMX’ position on ILA workers’ wages, which it said did not explain how these salaries were derived, adding they were meant to be misleading.

“USMX uses this incomplete picture to distort the wage and benefits structure,” ILA said. “USMX fails to note that long shore labor cost amounts to between 3 percent and 4 percent of the shipper’s total cost. Unlike other hourly workers who work a 40-hour workweek, most long shore workers make themselves available for work on a daily basis.
Early on, the ILA negotiated a guarantee of a day’s pay. Otherwise, the employer had no obligation to pay if a vessel did not arrive on schedule.”

The ILA said that the coast wide average of wages and benefits of $124,138 focuses only on containerized cargo where wages and benefits are substantially higher than the wages and benefits paid for break-bulk cargo which is handled piece by piece because fewer workers are used on containerized cargo.

An ILA spokesperson told LM that the organization is waiting on a new offer from USMX in order for talks to resume.

About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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