East Coast Port Strike Still On The Table
Recent statements by both labor and management indicate that the potential for an East/Gulf Coast port strike remains very much in play. After an initial negotiating session in late March, the two sides issued a joint statement stating, “We had a productive exchange of ideas that will give us a good start toward negotiating a contract sooner rather than later in 2012. Both sides recognize the importance of the East and Gulf Coast ports to the nation’s economy and remain committed to reaching an agreement without any disruption to port operations.” But more recently, International Longshoreman Association President Harold Daggett indicated that little progress has been made and the sides remain far apart.
The current pact expires on September 30. Since 1977, the two sides have successfully negotiated nine successive new contracts without a disruption in operations. Despite the 34-year no-strike track record, shippers remain nervous and with good reason. As the calendar shifts from May into June, each day that passes without a settlement puts more pressure on shippers to begin to implement the contingency plans that are already in place to re-route cargo where possible to land in West Coast ports. Substantial rerouting will put pressure on West Coast capacity, and disruption or backups will likely result in such a case.
Also, note that successful negotiation of a new master contract is not the end of the story. New local contracts also need to be hammered out.
The bottom line from our viewpoint is that some diversion from east to west is likely, and could become apparent as early as June. The closer we get to September 30 without a resolution, the greater the degree of disruption and potential chaos will be.