(Reuters) – Labor negotiations at U.S. ports on the East Coast and Gulf of Mexico pose a looming risk for retailers, manufacturers and other shippers already facing longer transit times and higher costs.
The contract with the International Longshoremen’s Association, covering 45,000 dockworkers in three dozen ports stretching from Maine to Texas, expires Sept. 30. US President Joe Biden’s friendly bid for re-election.
On Monday, the ILA canceled a planned start of talks this week with the U.S. Maritime Alliance, citing that one member of the employer group was using automation technology in violation of previous agreements.
ILA President Harold Daggett previously warned that members would go on strike if a deal was not reached before the current contract expired. He warned local residents in vital trade centers such as New York/New Jersey and Houston to be prepared for a strike on Oct. 1, the union said.
Worker strikes at seaports in the United States are rare, but the noise and anxiety during contract negotiations is high. That’s because any slowdown or shutdown would affect billions of dollars of goods, ranging from food and medicine to furniture and factory equipment.
Port of Los Angeles Executive Director Gene Seroka said Wednesday there was nothing unusual about the ILA’s events this week.
“There are stops and starts during these negotiations,” Seroka said.
In May, East Coast and Gulf Coast ports had a slight market advantage over competing West Coast ports. That’s when Vincent Golebowski, head of the company’s global supply chain Trainer and Keith Spade, handbag retailer Tapestry (NYSE:), told Reuters it is more focused on avoiding losing transit time by rerouting cargo out of the Suez Canal due to attacks by Houthi militants in the Red Sea.
The ILA’s strike warning this week is sure to test the nerves of shippers like Golebowski.
Seroka on Wednesday said some importers were moving “minor volumes” of cargo from eastern and Gulf Coast ports to Los Angeles as a hedge against U.S. contract negotiations, Red Sea disruptions and Panama Canal passage restrictions.
Los Angeles and other West Coast ports lost market share in the lead-up to a contract with the International Trucking and Warehouse Union last June. This agreement ends 13 months of initial negotiations.
“There was a lot of saber rattling, but the goods were moving,” said Chris Jones, executive vice president of trade data provider Descartes (NASDAQ:) Systems Group.