Friday, April 12, 2013

Container Freight Shipping Group Negotiates a Deal with Longshoremen - at a Price

Wage Rises and Box Royalty Payments Agreed to Keep Shipments Flowing
Shipping News Feature

US – The accord between dock workers unions responsible for handling container freight and their shipping industry port employers on the Atlantic and Gulf coasts this week has been heralded as a victory by the associated labour representatives, not only for the $1 per hour increase included in the six year deal, but for the mutual ambitions of employers and employees to investigate ways to ‘recapture’ traditional port jobs lost at present by the International Longshoremen’s Association (ILA) workers.

The previous employment contract between the ILA and the United States Maritime Alliance (USMX) expired last year and the new terms received record support from the union organisation’s members in which every one of its local associations ratified it with over 88% of the 8,000 or so members involved agreeing to the deal.

Fear of an all out stoppage resulted in all parties treating the matter with a sense of urgency and the union approval, which followed more than a year of negotiations, came eight days before the scheduled ratification vote by USMX members. The Master Contract includes the $1 an hour wage increase in 2014, 2016 and again in 2017, the final year of the contract. Starting pay would remain at $20 an hour but new employees would reach the top wage scale in six years instead of the current nine.

In a separate vote on a local agreement, the ILA also announced that workers at the Port of New York and New Jersey, the largest on the East Coast, had voted by a margin of more than 3 to 1 to approve a new local contract with the New York Shipping Association. Voting Tuesday, workers at 10 of the 13 other East and Gulf Coast ports also ratified separate local agreements, according to the union. It said negotiations at the three remaining ports Philadelphia, Baltimore and Hampton Roads are expected to conclude next week.

In addition to health benefits, safety and training, all of which are included there is one feature of the agreement which will strike a note with many older members of the freight and logistics industry familiar with deep sea port operations i.e. the retention of the annual ‘container royalty’ payments, a term fully explained in an article we wrote on the dispute back in January when we predicted a negotiated outcome such as this. The continued payments, devised to help offset the impact of containerisation and increased tonnages fifty years ago, are viewed as anachronistic by the port employers having no relevance to the current way cargo is generally handled, and will have been a bitter pill to swallow for USMX one would imagine.

Under the new terms not only will the employers stump up an amount equivalent to the 2011 level, some $211 million, but will have to find up to an additional $14 million for administrative expenses, and share equally with the ILA any container royalties that exceed $225 million. Additionally there is mention in the agreement of ‘protecting the jobs of workers displaced by the introduction of new technology and automation at the ports’, something some employers may also feel is akin to a form of ‘Luddite Tax’.

Whatever each side may think of the agreement it guarantees, as far as is possible, the uninterrupted flow of container traffic through the ports concerned for the next few years, a period when many predict an upturn in the region’s box throughput when the current Panama Canal upgrade is completed. Another certainty is that the deal has done no harm to the credibility of ILA President Harold J. Daggett, a third generation ILA member, who took on the role in July 2011 and has been involved in the negotiations since day one.

With a total of 35,000 members countrywide the ILA is a force to be reckoned with and the two postponements of industrial action whilst continuing to bargain under the auspices of the Federal Mediation and Conciliation Service (FMCS) which Daggett and the USMX agreed to as they continued for months under the old contract terms look now like a victory for common sense. Mr Daggett commented:

“This master contract and the formation of the ILA steering committee mean that the ILA is now well positioned for the future to serve our members and our industry. We can better help employers and port areas to improve productivity and profits, as the shipping world eagerly awaits increases in cargo volume with the widening of the Panama Canal and the expansion of worldwide trade.”

Photo: Harold J Daggett.