On January 8, the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) reached a tentative agreement for a new master contract for ports on the U.S. east and gulf coasts. The agreement will likely stave off potential strike action from the ILA after the current contract extension’s expiration on January 15. The deal has yet to be officially ratified by the ILA but the inclusion of continued restrictions on fully automated terminals in the new contract could satisfy the labor union’s demand for job security.
Risks remain until the contract is ratified
Following the tentative agreement, full-scale strike action appears increasingly unlikely. While the threat of disruptions cannot fully be ruled out until the contract is officially ratified, both sides indicated that strikes following the January 15 deadline will not take place and the current contract will be extended until the new one is ratified. The ILA will schedule an official ratification vote for its members at an unspecified later date. Despite the positive developments since January 8, both parties could still walk away from the deal and thrust ports back into uncertainty. Although unlikely, it is not unprecedented for union members to walk away from a tentative agreement with an employer. There are several risk scenarios that will remain until the contract is officially ratified. First, the contract could be quickly ratified by ILA and USMX members. This scenario would lead to minimal disruptions to ocean trade beyond the preventative measures that were already being put in place in preparation for the strike. Given the positive nature of the ILA and USMX’s joint statement on the tentative agreement, this seems the most likely scenario and carriers and shippers will likely begin resuming cargo flows to east and gulf coast ports in the coming weeks.
The second risk scenario is that either party could object to aspects of the contract or demand additional provisions. While both parties may continue to work towards an agreement, workers could launch work-to-rule orders to gain more leverage. Measures such as limits on overtime or spontaneous walkouts would not be as disruptive as a full-scale strike, however, these actions could still lead to disruptions and contribute to overall uncertainty for ports on the east and gulf coasts. As no specific details from the tentative contract have been released at the time of writing, it is difficult to ascertain how favorably both sides will view the contract. However, as the contract includes provisions to protect ILA jobs against automation developments at ports and an increase in pay, the contract will likely be ratified by both parties. Lastly, either side could still reject the contract entirely which would almost certainly lead to a resurrection of strike threats and the risk of major disruptions to east and gulf coast ports. This scenario has moved to the least likely scenario, especially in light of President-elect Trump’s favorable comments towards the ILA. The union leadership released a social media post following the tentative agreement praising President-elect Trump for his support. With so little time left before the presidential transition on January 20, the USMX is unlikely to risk returning to the bargaining table with an administration about to enter the White House that is favorable to the ILA.
Vessel arrivals to the U.S. east and gulf coasts fall on the eve of contract expiration
In preparation for the threat of a potential strike by the ILA in January and in advance of President-elect Trump’s inauguration, many companies began “front-loading” imports into the U.S. in November and December. However, vessel arrivals into major U.S. east and gulf coast ports have declined in the final week of December and in the first week of January indicating that companies reduced their shipments ahead of these potentially disruptive events.
The number of waiting vessels at west coast ports in North American increased through December and January after a decrease in late October and early November, reaching their highest levels for all of 2024 in the final week of the year. President-elect Donald Trump’s plan to impose broad tariffs of 10% to 20% on all imported goods and tariffs as high as 60 to 100% on imported goods from China was a major driver of these increased vessel flows. The potential strike on the U.S. east and gulf coast also contributed to the increased vessel counts on the west coast as shippers looked to avoid entangling cargo in any disruptions that may occur. The spike in waiting vessel counts follows a similar pattern to what unfolded before the strike in October as carriers preemptively brought shipments into the U.S. before any disruptions from the strike could impact shipments.
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