Industry Focuses on Labor Negotiations at East Coast Ports in the U.S.

East Coast Port Workers Warn of Strike if Contract Renegotiations Fail
Wage Increases, Terminal Automation, and Work Allocation Major Points of Contention
Businesses Operating in the Region Must Prepare for Potential Strike Impacts
International Longshoremen’s Association Forecasts Strike if Contract Talks Break Down

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Harold Daggett, President of the International Longshoremen’s Association (ILA), representing workers along the U.S. East Coast, warned during his keynote speech at the 2023 ILA Convention in Florida last July that if a new contract including wage increases and improved welfare is not agreed upon with the employers before the current contract expires on September 30, 2024, they would not extend the existing contract and would proceed to strike. He cited an instance where a company CEO received a $4 million end-of-year bonus, arguing that claims of budget constraints preventing wage increases were unfounded and warning employers against it.

ILA and USMX: Key Players in East Coast Port Operations

Since the modernization of the Panama Canal was completed in 2002, shipping logistics access between Asia and the U.S. East Coast has improved, leading to a rapid increase in cargo volume. The Port of New York and New Jersey, the largest on the East Coast, saw its traffic grow from 3.8 million TEUs in 2002 to 5.2 million TEUs in 2008. The port of Savannah, significantly impacted by this growth, expanded from 1.5 million TEUs in 2002 to 2.6 million TEUs in 2008, surpassing Hampton Roads and Charleston ports. As of 2022, the Port of New York and New Jersey handled 31.9% of the total East Coast port volume, processing 9.49 million TEUs of cargo worth $271 billion, ranking it 17th worldwide and second in the U.S. after the Port of Los Angeles. The pandemic-induced logistics backlog, strikes by dockworkers and truck and rail unions on the West Coast leading to over 100 ships waiting at the Ports of Los Angeles and Long Beach, and new large factories in Texas and Georgia have all contributed to the recent increase in East Coast port volumes.

Trends in Cargo Volume Handling at the Top 10 Ports on the U.S. East Coast (Unit: Million TEUs)
[Source: Port Economics, Management, and Policy]

The ILA, a labor union with 45,000 members working across 14 ports from Maine to Texas along the U.S. East Coast, is negotiating with the United States Maritime Alliance (USMX), which comprises 36 companies and organizations including terminals, port authorities, and shipping companies. Negotiations on contract terms began in September 2022 ahead of the October 2024 contract renewal. Dave Adam, representative of the Maher Terminal in New York and New Jersey and a member of USMX, expressed optimism about reaching a master agreement quickly, praising the ILA for its business-minded approach.

Map Guide for ILA Member Workers’ Employment Locations
Note: (Clockwise from top right) Boston, New York∙New Jersey, Philadelphia, Baltimore, Hampton Roads, Wilmington, Charleston, Savannah, Jacksonville, Miami, Tampa, Mobile, New Orleans, Houston
[Source: International Longshoremen’s Association]

Three Major Negotiation Points: Salary Increases, Terminal Automation, and Work Allocation

Negotiations between the two parties resumed in February after a pause, with discussions on regional matters beginning in September 2022 and concluding in New York, New Jersey, and Baltimore by March 2024. Despite progress, the industry remains on edge due to Daggett’s declaration at the ILA convention last summer that failure to reach an agreement would lead to an immediate strike. The main issues in the master contract negotiations include wage increases, terminal automation, and work allocation. The industry closely watches these negotiations, considering the precedent set by the West Coast ports agreement, which included a 32% wage increase over six years and a one-time “Hero Bonus” for working during the pandemic.

The automation of ports, including the introduction of autonomous vehicles and automated cranes, has sparked debate. While such innovations could increase productivity by 30% and reduce labor costs, the ILA opposes automation, fearing job losses and decreased employment stability. The 2018 contract prohibited the introduction of fully automated terminals and equipment along the East and Gulf Coasts until September 2024, with certain exceptions for container operations automation provided worker protection measures, such as retraining or new job assignments, were in place.

Work allocation disputes began with the South Carolina Port Authority’s announcement of work assignments at the newly opened Leatherman Terminal in Charleston, leading to legal battles and an NLRB ruling favoring the ILA. This decision, and its implications for future operations at new terminals in Georgia, has been closely watched by the industry.

Implications for Businesses

The National Retail Federation (NRF) has warned that a strike could negatively impact U.S. and global trade, urging the ILA and USMX to avoid negotiation breakdowns. A strike could disrupt terminal operations, leading to delays, inventory shortages, container scarcities, transportation route changes, and additional logistics costs. The industry advises businesses to prepare by communicating potential strike risks to buyers, securing adequate stock in advance, and exploring alternative shipping routes through Canadian ports or other means.

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