Ports on the US East Coast and Gulf region, which include some of the busiest vehicle processing ports in North America, are facing the threat of widespread strike action by dock workers if talks regarding overtime rules and container royalties are not resolved by the end of the month. Discussion between unions, including the International Longshoremen’s Association (ILA), and the United States Maritime Alliance (USMX), representing container carriers, direct employers and port associations, broke down last week. Negotiations are tabled to restart on the September 17th but the Federal Mediation and Concilliation Service would not reveal any further details because of sensitivity of the dispute. According to one port processor, if the strike goes ahead it could close down all vehicle processing through the ports.

The strike action could affect ports including Baltimore, Brunswick and Jacksonville, as well as the port of New Jersey and New York, all of which are in the top five North American vehicle ports. The impact on container movements through the ports also threatens parts shipments.

Shippers are now reported to be looking at expensive contingency plans that include rerouting vessels to alternative ports, including those on the West Coast. GM confirmed that its logistics division was already working on such plans so that it would be ready should the strike go ahead.  Ford said its plans remain confidential.

Mercedes Benz USA, which has vehicle processing centres at Baltimore and Brunswick, said it was aware of the potential strike action and had contingency measures to ensure its parts distribution centres had adequate stock to support its dealers.

A spokesman said that the company was monitoring the situation “very closely” but did not foresee any negative impact on its September vehicle volumes through the ports.

“We're optimistic the negotiations will come to a successful conclusion,” added the spokesperson.

Port authorities are also keeping a close eye on developments. Jacksonville Port Authority in Florida would only say that, as a landlord port, any labour agreements at its terminals were between its tenants and their labour but that it was monitoring the situation and hopeful that an agreement could be reached.

There was a more candid response from port processor Amports. CEO Steve Rand told Automotive Logistics News that it looked like a strike was a possibility and that if it happened it would shut down the East Coast and Gulf ports for all finished vehicles. But Rand added that it was “hard to imagine that big union labour would walk before an election, given the huge money they provide [president] Obama.”

Spirit of cooperation destroyed
The ILA has criticized the USMX for “destroying the flow of productive negotiations with outrageous proposals and a take it or leave it attitude”.

As well as overtime rules the negotiations include container royalties, which are the payments made to union workers based on the weight of cargo received at each port.

ILA president Harold J Daggett said that while negotiations over the past year had been difficult they had been moving along in a “spirit of cooperation” with both sides expected to find a settlement in late August. However, Daggett said that years of cooperation and trust had been destroyed by the comments of USMX chairman James A. Capo.

"USMX demanded that the ILA give up its eight-hour guarantee that many port areas of the ILA have had for years,” said Daggett. “USMX also demanded that the ILA radically change the hard-fought contractual rules for the payment of overtime. These were items that should not even have been part of the master contract discussions, but USMX insisted that talks could not continue unless we agreed to negotiate this items.”

"They have adopted an ugly strategy that will not succeed," he added.

For its part the USMX has said that it is “ready and willing to engage in comprehensive bargaining to reach agreement on a new contract” but said that any dialogue must include substantive discussion of the existing inefficiencies it perceives as having crept into port operations.

In a letter to Daggett, James Capo referred to “archaic work rules and manning practices, and the system of guarantees and overtime pay practices that result in millions of dollars being paid for time not worked”.

He went on: “These inefficiencies are causing many of our ports to become prohibitively expensive, harming our competitive ability and threatening the long term viability of our operations.”

He added that the ILA had simply rejected USMX’s attempt to address the issues and when challenged on its lack of consideration, responded with a threat to strike.

Neither USMX or the ILA were willing to discuss the issue further in terms of its impact on the automotive industry.