(Reuters) – Labor talks at U.S. ports on the East Coast and Gulf of Mexico represent a looming danger for retailers, manufacturers and other shippers already struggling with longer transit times and higher costs.
The International Longshoremen's Association's contract, which covers 45,000 workers at thirty ports from Maine to Texas, expires on September 30. If an agreement is not reached by then, the union could call a strike that would occur during the crucial holiday container shipping season and worker protests. A friendly bid for US President Joe Biden for re-election.
The Israel Land Administration on Monday canceled the start of talks scheduled for this week with the U.S. maritime coalition, citing an employer group member's use of automation technology in violation of previous agreements.
ILA president Harold Daggett previously warned that members would strike if an agreement was not reached before the current contract expires. The union said it has alerted local residents in vital commercial centers such as New York/New Jersey and Houston to prepare to strike on October 1.
Labor strikes at seaports are rare in the United States, but noise and anxiety during contract talks are high. This is because any slowdown or stoppage in business will affect billions of dollars in products ranging from food and medicine to furniture and factory equipment.
Port of Los Angeles Executive Director Gene Seroka said Wednesday that the ILA's developments this week were not unusual.
“During these negotiations, there are stops and starts,” Seroka said.
Ports on the East Coast and Gulf of Mexico had a slight market share advantage over competing West Coast ports in May. That's when Vincent Golebiewski, Global Head of Supply Chain for the company said: trainer Tapestry, the seller of Kate Spade (NYSE:) handbags, told Reuters it is focusing more on making sure it doesn't waste transit time redirecting shipments away from the Suez Canal due to Houthi attacks in the Red Sea.
The strike warning issued by the ILA this week is sure to test the nerves of shippers like Golebiewski.
Seroka said Wednesday that some importers have moved “partial volumes” of cargo from East Coast and Gulf ports to Los Angeles as a hedge against U.S. contract talks, Red Sea unrest and traffic restrictions in the Panama Canal.
Los Angeles and other West Coast ports lost market share in the lead-up to the Longshore and Warehouse Union's international contract deal in June of last year. This agreement culminated 13 months of initial talks.
“There was a lot of war rumble, but the goods moved,” said Chris Jones, executive vice president at Descartes (NASDAQ:) Systems Group, a trade data provider.