(Reuters) – – Labor talks at U.S. ports on the East Coast and Gulf of Mexico are a looming risk for retailers, manufacturers and other shippers already grappling with longer transit times and higher costs.
The International Longshoremen’s Association contract covering 45,000 dockworkers at three dozen ports stretching from Maine to Texas expires on Sept. 30. If there is no deal by then, the union could call a strike that would hit during the vital holiday container shipping season and labor-friendly U.S. President Joe Biden’s bid for reelection.
The ILA on Monday called off this week’s planned start of talks with the U.S. Maritime Alliance, citing one member of that employer group’s use of automation technology in violation of prior agreements.
ILA President Harold Daggett previously warned that members would strike if a deal is not reached before the current contract lapses. He has alerted locals at vital trade hubs like New York/New Jersey and Houston to be ready to strike on Oct. 1, the union said.
Seaport labor strikes are rare in the United States, but noise and anxiety during contract talks runs high. That’s because any work slowdown or stoppage would affect billions of dollars of products ranging from food and medicine to furniture and factory equipment.
Port of Los Angeles Executive Director Gene Seroka on Wednesday said this week’s ILA developments were not unusual.
“During these negotiations, there are stops and starts,” Seroka said.
Ports on the East Coast and Gulf of Mexico had a slight market share edge over rival West Coast ports in May. That’s when Vincent Golebiowski, global head of supply chain for Coach and Kate Spade handbag seller Tapestry (NYSE:), told Reuters he was more focused on making sure he wasn’t losing transit time rerouting shipments away from the Suez Canal due to Houthi militant attacks in the Red Sea.
This week’s strike warning from the ILA is certain to test the nerves of shippers like Golebiowski.
Seroka on Wednesday said some importers have shifted “fractional amounts” of cargo from East and Gulf Coast ports to Los Angeles as a hedge against the U.S. contract talks, Red Sea disruptions and Panama Canal passage restrictions.
Los Angeles and other West Coast ports lost market share in the lead-up to the International Longshore and Warehouse Union’s contract deal in June last year. That agreement capped 13 months of start-and-stop talks.
“There was a lot of saber-rattling, but goods moved,” said Chris Jones, an executive vice president at trade data provider Descartes (NASDAQ:) Systems Group.
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