Monday, August 27, 2012

BREAKING NEWS

Retailers to ILA, USMX: Cargo could be diverted “within the next week”

On the heels of last week's news of stalled negotiations between shipping industry management and its labor force as the impending contract deadline between the two looms by September's end, retailers issued a warning that they could steer their inbound freight away from ports on the East and Gulf coasts in a matter of days if both sides don't get back to serious discussions while the corresponding holiday shipping season is supposed to be hitting high gear.

"We are facing a critical time," said Matthew Shay, president and chief executive of the National Retail Federation in a letter copied to International Longshoremen's Association President Harold Daggett and United States Maritime Alliance Chairman and CEO James Capo regarding the walkout by the former's group after three days at the bargaining table with management last week in Delray Beach, Florida.

"We understand and recognize that there are tough issues that need to be resolved. The issue will only be resolved, however, by agreeing to stay at the negotiating table until a final deal is reached," said Shay.

However, cargo diversions like those that occurred in 2002 when there was a waterfront labor lockout on the West Coast could occur again, he said.

"Failure to reach agreement will lead to supply chain disruptions which could seriously harm the U.S. economy," said Shay.

"Now that there is a real risk of disruption, most retailers using the East and Gulf Coast ports will be forced to executive contingency plans within the next week to meet in-store holiday deadlines. These plans carry great expense but they are necessary to avoid disruptions that will add costly delays to our members' supply chains," the NRF chief said.

The ILA and USMX re-engaged with their on-again, off-again negotiations in Florida in late July as both sides at that time claimed to their respective members that there had been "significant discussions" on "critical items of importance" and that "substantial progress" had been made over what each have referenced publically as the central issues that include terminal automation, chassis pools, wages, and benefits.

However, last week, the USMX released a statement regarding the broken-off negotiations as the employer group referred to ILA workers being "among the most highly compensated workers in the country, on average receiving $124,138 a year in wages and benefits, which puts them ahead of all but 2 percent of all U.S. workers."

The ILA's Daggett retorted in a statement that: "USMX fails to note that longshore labor cost amounts to between 3 percent and 4 percent of the shipper's total cost."

When the two sides might get back to negotiations is now unclear as the shipping industry reportedly girds for the possibility of a longshore labor that could stretch from Maine to Texas.

The NRF's Shay said that without the "certainty" of a "secure, long-term" longshore labor contract, retailers and other shippers "will surely reevaluate their supply chains and the short-term and long-term reliance on these ports."


 

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