December 28, 2012 6:29 pm

Deal averts strike at US’s troubled ports

A strike that threatened to halt trade at ports on the US east coast from Saturday night and disrupt the economy was averted on Friday as employers and union representatives struck a deal.

A statement from George Cohen, federal government mediator in the dispute, said the two sides had reached an agreement in principle on container royalty payments, the payment per container moved, the main issue in dispute.

He said the sides would continue to discuss other issues in their contract negotiations during a 30-day extension to the existing contract. The sides subsequently announced they had agreed to lengthen the extension, which would now run until February 6.

Members of the International Longshoremen’s Association had been due to stop work at midnight Friday if no agreement was reached, in the first significant east coast port strike since 1977. Retailers and other shippers reliant on imported containerised goods had warned a strike threatened hundreds of millions of dollars’ worth of damage to the US economy.

The abortive strike again highlighted the often fragile relationships between US port employers and their trade unions, as well as the continuing struggle to introduce new, more efficient working practices to US ports. Much of the US’s busiest port complex – the twin ports of Los Angeles and Long Beach – ceased work for six days in late November and early December in a dispute involving a handful of clerical workers.

Mr Cohen said given the continuing talks, neither side would reveal the substance of the agreement over container royalties.

“What I can report is that the agreement on this important subject represents a major positive step toward achieving an overall collective bargaining agreement,” he said.

“While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the . . . extension period.”

Neither the United States Maritime Alliance, which represents port employers, nor the ILA added anything to Mr Cohen’s statement.

The National Retail Federation, which warned of a potential strike’s severe consequences, welcomed the contract extension but urged both sides to push ahead with negotiating a long-term contract.

“A coast-wide port shutdown is not an option,” Matthew Shay, its chief executive, said. “It would have severe economic ramifications for the local, national and even global economies and wreak havoc on the supply chain.”

ILA members have received royalty payments for containers handled since 1965, under a deal struck when the then-new technology was introduced, eliminating vast numbers of waterfront jobs.

Employers had been seeking to cap the payment any worker could receive from the royalty fund, from which payouts depend on the number of containers a facility handles annually.

The employers had argued that the payments – based on changes to work practices agreed before many of the present workers were born – were an anachronism. The ILA had argued that employers were continuing to reap the efficiency benefits of containerisation and that the payments were still justified.

New York terminals at heart of problems

A line of trucks waited on Friday morning outside Red Hook Container Terminal, one of the last active port facilities in the traditional port area of Brooklyn, across the East River from Manhattan’s skyscrapers, writes Robert Wright. Inside the terminal, the cranes were lowered over the Fouma, a ship operated by France’s CMA CGM and set to head down the US east coast to the Caribbean.

It is the working practices of terminals like Red Hook, scattered on both sides of New York Bay, that have been at the heart of the dispute between the International Longshoremen’s Association and employers. The dispute had threatened to bring the smooth flow of goods through terminals like Red Hook all along the US’s east and gulf coast to a halt.

Although an agreement brokered by a federal administrator yesterday averted an immediate strike, many involved believe US ports urgently need to address severe efficiency problems.

One port employer, who declined to be identified, said New York/New Jersey, much the busiest east coast port, suffered from much bigger inefficiencies than other large east coast ports such as Norfolk, Virginia. Local agreements at the port required large numbers of workers to be present any time a ship was handled.

Richard Lidinsky, chairman of the Federal Maritime Commission, in August told the Financial Times the US needed a national ports policy to prevent traffic from migrating to more efficient Mexican and Canadian ports. US ports are typically far less automated and more labour-intensive than their rivals overseas.

However, Rudy Mack, a veteran of the maritime industry, said he was cautiously optimistic the six-year contract under discussion between unions and employers could buy a lasting period of industrial peace and progress on efficiency. “That’s a good sign because you will have quite a long period with no strike," Mr Mack said.

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