ILA-USMX Contract Status: 01/06/2025
The following is an update on the USEC-Gulf labor negotiations between the ILA (employees) and USMX (ocean carriers). To date, negotiations remain unresolved with no apparent progress on the primary issue – automation. The tentative agreement reached on Oct 3 expires on Jan 15, 2025. Thus, the risk of a disruption is increasing as the deadline approaches.
While negotiations are set to resume on Jan 7, much of the industry expects another strike on Jan 15. It’s estimated that every 1 day of work stoppage will result in 5 days to recover. While there’s no consensus, many expect the strike to last between 3-5 business days.
The ILA has taken a hard line against automation technology at ports under its jurisdiction. It singled out semi-automated rail mounted gantry cranes (RMGs) as a technology that it wants to bar from further implementation at East and Gulf coast ports under the new contract. The USMX countered that technology, including RMGs, boosts port productivity and creates more opportunities for longshore workers (JOC). Progress on the talks have been further complicated by the attention of President-elect Donald Trump, who sided with the ILA’s stance against automation (JOC)
Many ocean carriers have proactively filed congestion-work disruption surcharges, should a work stoppage occur. CMA, Yang Ming, Hapag, MSC and Zim will implement surcharges ranging from $1125 to $2000 per 40’. We expect the other carriers to implement similar surcharges. eShipping will pass-through these surcharges ‘at cost’ should they occur.
The previous 3-day work stoppage impacted nearly 50% of all US containerized traffic resulting in increased port fees, delays and increased transit times due to vessel re-routings. According to Sea-Intelligence, November’s global on-time performance was only 54% with the average delay at 5.4 days.
To mitigate the potential impact, the following strategies can be reviewed although each supply chain varies. We would encourage a diversified strategy to mitigate potential impact:
- Divert shipments to alternate ports (ie. via USWC or Canadian ports)
- Utilize air freight for urgent cargo
- Transload at USWC ports
- Anticipate even longer lead times
eShipping encourages all international customers to contact your eShipping account manager this week. eShipping wants to support our customers during this uncertain and challenging situation. Customers should be prepared for potential disruptions by exploring alternative routing options and staying informed about ongoing negotiations.