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The threat of a major strike at East and Gulf Coast ports is looming more ominously as contract negotiation talks broke down last week.
Some 85,000 dockworkers, unionized under the International Longshoremen’s Assn. (ILA), will see their labor contracts expire Oct. 1 with the U.S. Maritime Alliance (USMX). Echoing last year’s similar situation on the West Coast, a key hang-up to a successful renegotiation has been regarding automation.
The ILA canceled talks after discovering that APM Terminals and Maersk Line are using an auto gate system, which autonomously processes trucks without ILA labor and allegedly violating the coast-wide master contract currently in place. This system, initially identified at the Port of Mobile, Ala., is reportedly being used in other ports as well, ILA said.
“There’s no point trying to negotiate a new agreement with USMX when one of its major companies continues to violate our current agreement with the sole aim of eliminating ILA jobs through automation,” said ILA President Harold J. Daggett, who serves as chief negotiator for the union.
The ILA said it will not meet with USMX until the issue is resolved.
Like what was seen last year and in 2022 on the West Coast but in reverse, fears of a strike could cause shippers to divert their cargo to the West Coast.
“It’s also possible that volumes through the East and Gulf Coast may increase ahead of Oct. 1, if concerned shippers decide to front-load more cargo in advance of a potential strike,” said freight forwarder and logistics provider CV International in a blog post.
The news comes at a time when ocean container rates are rapidly rising on both coasts, straining importers in all industries.
Spot rates have now risen close to 60% in six weeks, currently sitting at an average of $4,801 per 40-foot container, according to tracker Drewry. That’s 202% higher than the same week last year. Average rates from Shanghai to Los Angeles are $6,025, while Shanghai to New York sit at $7,299.
