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East and Gulf Coast Port Strike Likely Averted - And Why a Diversified Port Strategy Make Sense

January 17, 2025
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The entire supply chain industry is breathing a cautious sigh of relief as the International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) have reached a tentative six-year master contract agreement – with “tentative” an operative word. With this development, a potentially disruptive strike across US East Coast and Gulf Coast ports looks to have been averted.

 

Key Points of the Agreement

Job Security Amidst Modernization

port of newarkThe agreement appears to address a key tension: protecting union jobs while introducing modern technologies to improve efficiency at ports. Historically, the ILA has strongly resisted automation, citing fears of job loss as seen at other global ports where automation has significantly reduced the need for human labor.

The tentative deal suggests a phased approach to implementing automation, allowing for limited modernization while maintaining job opportunities for dockworkers. This likely includes agreements on:

  • Training Programs: Ensuring workers are upskilled to manage and operate automated systems, such as automated cranes, yard tractors, and container tracking technologies.
  • Job Protections: Introducing automation where feasible but maintaining strict guarantees on labor hours or workforce levels to minimize job displacement.
  • Hybrid Operations: Combining traditional dockworker roles with newer automated tools, ensuring that human oversight remains integral to port operations.
  • Efficiency Gains: Ports may adopt advanced tracking systems, predictive analytics, and remote-control equipment to improve throughput. These changes aim to make U.S. ports more competitive internationally while respecting labor rights.

Importantly, the agreement explicitly bans full automation and the use of artificial intelligence to replace workers, requiring that semi-automated equipment be accompanied by additional labor hires.

 

Wage Increases

The tentative agreement reportedly includes significant – previously reported as 62% – wage increases for ILA members. This is particularly notable, given that the port industry is coming out of a freight recession, and in an industry that has already seen reductions in workforce levels and downward pressure on wages in many other supply chain sectors.

 

Ratification Still Needed

The tentative deal still requires ratification by the ILA's 45,000 members. All USMX members must approve as well. While the agreement has brought temporary relief, the underlying challenges—particularly those surrounding automation and infrastructure upgrades—highlight vulnerabilities in the supply chain.

 

Why the Agreement Matters to Shippers

As automation now has at least a partial green light, shippers who rely on East Coast and Gulf Coast ports can hope to see quicker turnaround times, improved accuracy in cargo handling, and reduced congestion at major ports.

 

How does this Agreement Differ from the West Coast Agreement?

Recall that, on the West Coast, there was a lengthy negotiation process between International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). Similar to the East Coast port negotiations, the two sides appeared to be miles apart at times, with the biggest points of contention also being wages and automation at the terminals.

Finally, the two sides reached an agreement on June 14, 2023. The new labor contract is a 6-year deal covering all 29 ports on the US West Coast. The 6 years is notable as, historically, most of the contracts between the ILWU and PMA have been 4-year agreements.

The labor agreements that have resulted from both negotiations (East/Gulf Coasts and West Coast) differ in their approaches to modernization and automation. The East Coast agreement takes a more restrictive stance on automation. It explicitly bans full automation and the use of artificial intelligence to replace workers, requiring that semi-automated equipment be accompanied by additional labor hires. This reflects the ILA's long-standing resistance to automation and its emphasis on protecting dockworker jobs in the face of technological advancements.

In contrast, the West Coast agreement adopts a more flexible approach. While the specific terms remain undisclosed, it is believed that the deal allows for greater integration of automation at cargo terminals. The ILWU's willingness to negotiate automation terms reflects a pragmatic response to the increasing global reliance on technology in logistics, positioning West Coast ports as more adaptable to future operational demands – and, perhaps, less vulnerable to automation-related labor disputes.

These differing agreements underscore regional distinctions in labor strategies: the East Coast prioritizes job security through strict limits on automation, while the West Coast focuses on fostering operational efficiency while navigating labor concerns. Both deals, however, aim to ensure stability in critical supply chain operations.

 

Takeaways for Shippers: Navigating Supply Chain Uncertainty

Shippers must remain vigilant, even with this tentative agreement, as potential disruptions could resurface if negotiations falter or external challenges emerge. Here are actionable steps to safeguard supply chains in uncertain times:

Diversify Port Usage

  • Leverage West Coast Ports: With East Coast operations under scrutiny, the West Coast provides a stable alternative for shippers.
  • Consider Port Proximity to Key Markets: West Coast ports like Los Angeles and Long Beach offer direct access to inland distribution networks, making them ideal for high-velocity shipments.
Work with 3PLs Experienced in Port Drayage

  • Partner with a 3PL like Weber Logistics that specializes in West Coast port drayage to streamline container movement, avoid delays, and optimize costs. Weber's expertise ensures quick turnarounds at ports, even during peak seasons.
Monitor and Adjust Routing Strategies

  • Regularly evaluate shipping routes to adapt to port congestion or tariff changes. If East Coast ports face delays or instability, shifting volumes to the West Coast can prevent supply chain bottlenecks.
Increase Visibility Through Technology

 

Why the West Coast Should Be Part of Your Strategy

As this recent agreement highlights, port disruptions can ripple through supply chains, causing delays and increased costs. The West Coast offers a reliable alternative with modernized infrastructure, faster shipping from Asia and key manufacturing hubs, and proximity to major consumer markets. Weber Logistics, with its integrated approach to logistics that combines port services, warehouse distribution, and final-mile delivery, can act as a strategic partner to keep your operations moving efficiently.

Contact Weber today to learn more about how our West Coast logistics solutions can provide your supply chain with the necessary agility to confront supply chain challenges as they develop.