The International Longshoreman's Association and waterfront management, averting a possible Dec. 30 strike that would have paralyzed shipping at 14 U.S. ports, have extended their current contract for an additional 30 days after reaching a compromise on what became the lightning-rod issue of container royalty payments to union members.

In a statement issued today, the Federal Mediation & Conciliation Service, which has been mediating talks since early in the week, said the two sides agreed to extend their collective bargaining agreement, which was set to expire tomorrow, until Jan. 28.

Without a new contract or an extension, 14,500 ILA members were set to strike on Sunday, shutting down port operations from Maine to Texas. The extension keeps the retail supply chain open for business during the shipping season leading up to the spring buying cycle.

During the next 30 days, the ILA and the U.S. Maritime Alliance, representing waterfront management, will negotiate in a bid to resolve all remaining issues standing between them and labor peace at the ports.

USMX has proposed a six-year contract, which would run until the start of 2019 if both sides agree to terms in the next month.

FMCS said the two sides reached an "agreement in principle" on container royalties that have been paid to ILA workers every year since 1960. George Cohen, the agency's director, would not disclose details of the agreement on the controversial issue. He said that it represents "a major positive step toward achieving an overall collective bargaining agreement."

Cohen said he was "cautiously optimistic" that a new contract can be reached by end of January.

RETAILERS APPLAUD EXTENSION
In separate statements today, the National Retail Federation (NRF) and the Retail Industry Leaders Association, (RILA) which combined represent the U.S. retailing universe, welcomed the extension but urged both sides to stay at the bargaining table until a contract is reached.

"Retailers welcome news that the ports will remain open for business through the busy spring shipping season. Retailers are however eager to see the parties reach a long-term agreement that will ensure stable and predictable operations at East and Gulf Coast ports," said Kelly Kolb, vice president for government affairs.

The royalty payments were originally designed to compensate workers at the Port of New York and New Jersey for lost jobs and wages stemming from containerization and automation practices. Over the years, the royalty program became a core component of every contract, and covered all ILA members.

Last year, workers received, in aggregate, $211 million in royalty payments, roughly equal to 10 percent of container revenues at the ports, according to management. Based on the size of ILA's current membership, the payment stream provided each worker with about $15,500 last year.

USMX, which views the entire payment scheme as a relic of a bygone era, sought to freeze future payments at 2011 levels and not allow new hires to participate. The ILA believed the issue is part of the basic contract, and should be taken off the table entirely.

Management's refusal to do so led the ILA to decline Cohen's Dec. 18 offer to extend the current contract until Feb 1. With no new talks scheduled at the time, the seagoing supply chain effectively abandoned all hope of a settlement and began preparing for a walkout Dec. 30.