Contingency planning for a potential work stoppage at U.S. East and Gulf coast ports in the event of failed labor talks is extremely difficult for shippers because the cost of routing cargo to other parts of the country may be prohibitively expensive, especially for some exporters, the head of a major port said Monday.
The International Longshoremen's Association is negotiating a new multi-year labor deal with the U.S. Maritime Alliance representing shipping lines, terminal operators and other waterfront employers involved in containerized trade. With slightly more than three months before the current collective bargaining agreement expires, there has not been any apparent progress and the rhetoric on both sides has cargo owners worried about a repeat of the 10-day shutdown of ports on the West Coast a decade ago. Many are openly talking about accelerating some imports into warehouses until they are needed, shifting inbound cargo to West Coast ports or using air freight.
But the reality is there are few realistic options, especially for exporters of low-value commodities such as waste paper, James Newsome, chief executive officer of the South Carolina State Ports Authority, said during question time at a conference in Chicago on stimulating U.S. exports.
The Containerization and Intermodal Institute organized the event.
"How do you contingency plan for something that even if it happens, its not going to last very long? And what do you do without spending a fortune and then you end up with egg on your face because all the plans you made you didn't need them?" Newsome said.
Transporting low-value exports by rail to the West Coast doesn't make sense because the high cost of rail service would wipe out any revenue, he suggested.
"Everybody realizes there is a lot at stake in this year's negotiations with the current economic environment and I'm certainly hopeful there's going to be a peaceful resolution to it," Newsome said.
ILA officials have said a new contract must include protection of dock workers from automation and guarantee container chassis-maintenance for union members, among other conditions.
Christopher Lytle, executive director for the Port of Long Beach, said West Coast ports don't want a work stoppage in the East, because it would end up hurting a lot of parties across the nation.
The relationship between marine terminal operators and the International Longshore and Warehouse Union is "as good as I've even seen it. And we hope that continues," Lytle said.
For further in-depth coverage on the ILA contract negotiations, see American Shipper
's Special Coverage
. - Eric Kulisch