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News January 02, 2025

As Port Strike Looms, Talks To Resume for New Worker Contract

Leadership for management and unionized dockworkers on the East and Gulf Coasts are set to restart discussions next week, but there's fear a work stoppage is inevitable – a threat to promo’s supply chain.

By  Christopher Ruvo

Key Takeaways

• Potential Strike: A dockworker strike at East and Gulf Coast ports could start on January 16, 2025, potentially affecting supply chains and increasing inflationary pressures on promo and other industries.

• Automation Dispute: The main issue is automation, with the union opposing it and management supporting it for efficiency.

• Negotiations Resuming: Formal talks between the union and management are set to resume on January 7, 2025.

New year. Similar supply chain threats.

A possible strike at East and Gulf Coast ports that could prove crippling to the supply chains of the promotional products industry and essentially all other markets depending on its duration is poised to begin on Jan. 16, 2025, if unionized dockworkers and their employers don’t reach an agreement on a new master contract.

Still, a last-ditch effort to prevent a work stoppage appears set to begin next week.

port of Elizabeth New Jersey

The International Longshoreman’s Association (ILA), the union representing workers, and the United States Maritime Alliance (USMX), which represents management, will reportedly resume formal negotiations on Tuesday, Jan. 7, unnamed sources told Freight Waves. Other outlets, including Bloomberg, also reported talks would get underway again next week.

The pending return to the bargaining table comes after the union and management broke off talks in November. Then, a four-day planned negotiating session ended after just two when ILA leadership walked away over what it characterized as USMX’s proposal for semi-automation at East and Gulf Coast ports.

Automation at Issue

The two sides have reportedly held informal discussions since the November talk-severing, but a return to formal discussions would be a positive and necessary development for anyone wishing to see a strike avoided.

Still, some analysts have said a work stoppage appears probable, given the union’s insistence that no automation or semi-automation be implemented at East and Gulf Coast ports and USMX’s assertion that some semi-automation is essential to make the ports more efficient and competitive.

ILA believes automation will put many of its members out of jobs, while USMX contends automation will help create more jobs through capacity gains and the like.

“Automation in our sector will not create new jobs,” Dennis A. Daggett, ILA’s executive vice president, said in a recent statement. “Unlike in other industries, the ILA already employs skilled mechanics and technicians. Automation here means job losses, plain and simple. Suggesting otherwise is either ignorant or dishonest.”

USMX has said it doesn’t want to eliminate jobs but rather “implement and maintain the use of equipment and technology already allowed under the current contract agreements and already widely in use, including at some USMX ports.”

The group gave an example in which, over the course of about a decade, a USMX terminal doubled its capacity thanks to “modern crane technology.” This capacity gain also, USMX said, doubled the number of daily union workers needed at the terminal.

"Modernization and investment in new technology are core priorities required to successfully bargain a new Master Contract with the ILA – they are essential to building a sustainable and greener future for the U.S. maritime industry,” USMX has said.

Outlook: A Strike Stirring

Back in October, an ILA strike ended after three days when the union and USMX reached a tentative agreement on wages. That proposed 62% pay hike over the life of the contract ended the work stoppage and the current contract was extended to Jan. 15, with workers returning to their posts.

Even so, automation appears to be a more difficult issue to solve than wages, and the union may be emboldened to take to the picket lines in January now that the holiday season has ended and in light of President-elect Donald Trump professing support for the union.

After a meeting with union leaders in December, Trump wrote on social media: “There has been a lot of discussion having to do with automation on United States docks…The amount of money saved is nowhere near the distress, hurt and harm it causes for American Workers, in this case, our Longshoremen. Foreign companies have made a fortune in the U.S. by giving them access to our markets. They shouldn’t be looking for every last penny knowing how many families are hurt.”

S&P Global VP Peter Tirschwell told podcast The Freight Buyers Club that Trump would “side with the union, 100%”. He added: “They go on strike then. They’re on strike for five days. Trump comes into office as the knight in shining armor who tells the ocean carriers ‘there’s going to be hell to pay, unless you agree to what the union is asking,’ and he saves the day.”

Shipping providers are taking the threat of a strike seriously. German carrier Hapag-Lloyd recently announced container surcharges due to take effect in the event of a strike. The surcharges will make it costlier to import through East and Gulf Coast ports but will not apply to containers already on the water or gated-in before Jan. 20; the charges will affect cargo gated-in on or after that date.

Meanwhile, Denmark-based global shipping provider A.P. Moller-Maersk is telling customers to pick up stocked cargo containers and return empty ones to East and Gulf Coast ports before Jan. 15 to help lessen possible disruptions stemming from a strike. “This proactive measure will help mitigate any potential disruptions at the terminals,” Maersk said.

Some business leaders are holding out hope that, even if a new contract is not inked by Jan. 15, the ILA and USMX will agree to allowing workers to continue in their jobs under the current deal.

“Let’s hope the parties can actually get a deal. If not, they must do another extension to avoid a strike!” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, in a post on X.

By one estimate, a strike would cost the United States economy $3.78 billion a week and disrupt the supply chains of a spectrum of industries, including food, pharmaceuticals, apparel, automotive and promotional products. The three-day strike in October caused delays and backlogs at affected ports that lasted for weeks.

Promo wasn’t significantly affected by the three-day strike. A work stoppage that stretches into weeks instead of days, however, could have more dire consequences, including causing considerable delays in getting products made overseas landed and stocked stateside while sending importing/shipping costs soaring. Such ills, if protracted enough, could lead to stock gaps in promo and higher pricing on products.

Between the strike possibility and chance for intensified import tariffs under the incoming Trump administration, some promo suppliers have been working to strengthen inventory to ensure ample stock at current pricing levels.

“Any companies that don’t have a risk mitigation plan in place are putting their businesses at risk,” Jing Rong, vice president of supply chain and sustainability at Counselor Top 40 supplier HPG (asi/61966), has told ASI Media