Contract talks between the bargaining committees of the International Longshoremen's Association (ILA) and waterfront management for ports along the East and Gulf Coasts collapsed yesterday. The stalled talks raised the unsettling specter of a strike or lockout that could paralyze cargo traffic moving in and out of 13 U.S. ports near the height of the pre-holiday shipping season.

The talks were scheduled to be held from Aug. 22 through Aug. 24 in Delray Beach, Fla., but were suspended before the end of the first day. No new talks are scheduled. The current collective bargaining agreement expires Sept. 30, and both the ILA and the United States Maritime Alliance (USMX), which represents ship management, were aiming for a new six-year agreement.

The union will review management's final proposals, which USMX had put on the table prior to the most recent talks, and take it to a full-wage scale committee meeting scheduled for early September, according to an ILA spokesman.

In a combative statement, James A. Capo, chairman and CEO of USMX, called the ILA's bargaining stand "uncompromising" and "contrary to the history of cooperation" that has marked the past 35 years of contract negotiations. Capo charged the ILA with being unwilling to "have a meaningful discussion" about the need to change archaic work rules that thwart efforts to improve productivity and remove inefficiencies at the ports.

In particular, Capo singled out operations at the Port of New York and New Jersey, which employs more ILA members than the other 12 East and Gulf Coast ports combined. For example, work rules at the port pay some ILA members for 24 hours of work even if they are only on the job for a few hours a day, he charged. Additionally, one out of every three ILA members working at the port makes more than $208,000 a year in wages and benefits, according to the USMX statement. That figure doesn't include workers' portion of $232 million in annual "royalties"—or bonuses—received by dockworkers at all 13 ports based on the weight of containerized cargo, according to the statement.

The ILA spokesman expressed surprise that the talks broke off so suddenly. "For some reason, [USMX] came in very heavy handed today after cooperating and having good negotiations over the past three months," he said.

The breakdown of talks comes a little more than a month after both sides reported meaningful headway on two key issues—the greater use of automation to replace manual functions at the docks and the continued jurisdiction of labor to repair and service chassis used by drayage companies.

RISING RETAILER CONCERNS
Retailers have become concerned over a possible work stoppage and have pressed both sides to reach an agreement well before September 30. In the meantime, there have been discussions among importers to shift cargo deliveries from East to West Coast ports to avoid any service disruptions. About 20 percent of all apparel, textile, and footwear traffic moves through the 13 ports stretching from Maine to Texas, according to the trade group the National Retail Federation (NRF).

Jonathan Gold, vice president of supply chain and customs policy for the NRF, said in comments today that an ILA strike or lockout "would be devastating for the economy" as the retail supply chain enters the peak shipping season.

U.S. retailers generally order and ship their pre-holiday goods during the mid-summer period. Although a work stoppage would not affect the bulk of holiday shipments, it would still upend the normal flow of goods entering U.S. commerce and could disrupt residual holiday traffic. U.S. imports from Europe would face the most severe disruptions, although Asian import flows could be affected as well. About 30 percent of Asian imports enter U.S. commerce through East and Gulf Coast ports.

Brian Dodge, senior vice president, communications and state affairs, for the Retail Industry Leaders Association (RILA), said in a July 20 e-mail that because shipping routes are generally determined when orders are placed, concerns about service issues will "reach peak urgency well before Sept. 30." Dodge was unavailable to comment on the latest developments.