The threat of another disruptive strike at major U.S. ports along the east and gulf coasts is looming as the contract extension that was signed between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) is set to expire on January 15, 2025. The ILA previously agreed to end its October 2024 strike after it reached an agreement with the USMX on wages. The extension was intended to give both sides more time to iron out details for a new contract but there is now a real risk that the two sides could fail to reach a deal before the middle of next month.
One major issue that continues to divide the two sides is the implementation of automation in port terminals. After resuming negotiations last month, the ILA broke off talks with the USMX and accused the latter of introducing language in their proposal to implement automation at ports. The ongoing impasse between the ILA and USMX could lead to another strike after the January deadline, exposing U.S. east and gulf coast ports to a new round of work stoppages, shipping and cargo processing delays, and worsening backlogs. No meetings are currently scheduled between both sides.
Three potential strike scenarios as expiration of contract extension approaches
As of early December 2024, four main scenarios could unfold. The first is that an agreement is reached to avoid any strike action before the contract deadline. The USMX released a statement after talks were broken off indicating its willingness to resume negotiations. While calling for talks to resume, the USMX also reprimanded the ILA for insisting on contract language that would limit the ability of ports to modernize their infrastructure. The ILA, on the other hand, insisted that the USMX’s proposals would result in job losses for union members. If the two sides manage to reach a last-minute agreement, cargo movements and port operations will continue unhampered.
The second scenario could be that a new and final contract agreement is partially or almost fully negotiated but not yet ratified, prolong the period of uncertainty. In this scenario, there is a possibility for partial strike actions as negotiating tactic to get a deal over the line. This tactic has been used by the ILWU during negotiations for a new labor agreement on the U.S. west coast in 2022-2023 where ad-hoc disruptions at individual ports or terminals have occurred for months, with little advanced notice.
The third scenario is the implementation of a work-to-rule order by the ILA after the expiration of the current contract. By imposing measures such as limiting overtime and spontaneous walkouts, port workers could severely hamper the efficiency of affected ports. While the effects of a work-to-rule scenario are less damaging than a full-scale strike, the action could still result in vessel queues and increased wait times at affected ports. A similar scenario unfolded during the west coast port negotiations in 2022-2023.
Lastly, the fourth scenario involves the ILA launching another full-scale strike action like the indefinite strike launched on October 1. Such a strike could cause major disruptions to port operations and cargo continuity at U.S. east and gulf coast ports. Knock-on congestion effects are also possible at U.S. west coast ports, Canadian ports, and the ocean sector in general in this event. The ILA’s three-day strike in October demonstrated the union’s willingness to launch wide-scale strike actions. In case of a prolonged strike, diversions to west coast ports are likely as shippers look to avoid congestion on the U.S. east and gulf coasts.
Increased cargo flows could also impact rail operations at U.S. west coast ports and nearby Canadian ports such as the ports of Vancouver and Montreal could see an uptick in traffic, even though solidarity strikes by west coast unions in both countries remain a possibility. The U.S. east and gulf coast ports combined make up roughly 50% of imported cargo and this volume could quickly inundate alternative ports of call.
Vessel counts at U.S. ports set to increase heading into the new year
Counts for waiting vessels at North American ports could increase heading into the end of the year after a decrease in late October and early November. Donald Trump’s victory in the 2024 Presidential election and his promise to impose tariffs on imports could see companies bring in additional inventory ahead of his inauguration. By front-loading shipments before Trump’s takes office on January 20, companies will be able soften the impact of tariffs ranging from 10-20% on all imported goods and tariffs as high as 60-100% on imported goods from China.
Secondly, vessel counts could also increase as companies begin boosting shipments in advance of the ILA and USMX’s contract deadline on January 15. The spike in waiting vessel counts follows a similar pattern to what unfolded before last October’s strike as carriers preemptively brought shipments into the U.S. before any disruptions could impact vessel operations.
Lastly, shippers of cargo from Asia to the U.S. will also have to contend with the Chinese New Year holiday beginning on January 21. The increase in vessels waiting outside U.S. ports could lead to congestion at port facilities grappling with the increase in cargo flows.
Likelihood of U.S. government intervention unclear
The timing of the potential strike also coincides with the transition in U.S. leadership from President Biden to President-elect Trump on January 20. President Biden previously declined to use the Taft-Hartley Act to intervene in the October strike over potential concerns that it could damage Vice President Kamala Harris’ standing with union voters before November’s presidential election. Now that the election is over, it seems unlikely that the Biden administration would become more directly involved in the current round of negotiations, punting the problem over to the incoming Trump administration.
While Republican administrations have traditionally been less supportive of unions, President Trump’s support among blue collar workers and his recent decision to nominate union-friendly Republican lawmaker Lori Chavez-DeRemer to the position of Labor Secretary could motivate his administration to support the ILA at the bargaining table. Trump himself has not indicated any preference for the ILA or USMX but the potentially severe economic impact of any strike action could force him to directly intervene in the negotiations.
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