September 6, 2012
The current International Longshoreman Association’s East and Gulf Coast contract expires on September 30th. While some progress has been made in resolving contract issues, the ILA and United States Marine Alliance (USMX) has reached an impasse on some issues. The 700 members of Local 1804-1 in Newark, NJ voted to provide “the authority to recommend and call for a strike if that action becomes necessary.”
Ocean carriers continue to monitor labor negotiations with the ILA for U.S. terminal services and remain hopeful for a resolution. It is possible that labor unrest or action such as strikes, lock-outs, work stoppage and slow-down may give rise to significant increases in port congestion and potentially disrupt the normal course of operations. In anticipation of increased costs arising from such congestion ocean carriers are applying a Port Congestion Surcharge to all shipments loaded or discharged at ports in the United States and Canada during any period of labor unrest.
Please note that this surcharge has been adopted as a precautionary measure to address the effects of potential labor action. Should there be no labor action affecting cargo movement to or from U.S. and Canadian ports, carriers may nullify this rule.
Also there is an outside chance that a local union in Los Angeles, CA will go on strike. If so, the other unions will honor the strike. Currently they remain in negotiations and we are hopeful that there is no action taken.
The potential East & Gulf Coast strike situation leaves a lot of uncertainty in the marketplace and can potentially throw an already weak economy into turmoil. Our personal opinion is that there will be no strike, but a slow-down is a definite possibility. Our guess is the slow-down will be done at the major ports… New York, Baltimore, Savannah and Houston… enough action to make a point without closing down the East & Gulf Coasts entirely. I am still the optimist.
We’ll provide updates on any major changes.
United Shippers Alliance