Market Update: Union Contracts- May 2021
The Longshoreman are the workers who provide the labor associated with loading & unloading of vessels for our imports and exports. There are two associations that represent each of the unions-the IWLU and the ILA. The ILWU is the International Longshore & Warehouse Union and they represent workers from Seattle/Tacoma to Southern California. The ILA is the International Longshoremen’s Association and they represent workers from Eastern Canada to the Great Lakes, the entire Atlantic Coast, Gulf Coast, and Puerto Rico. Both labor contracts are expiring on July 1st, 2022. They historically have been staggered in terms of expiration dates.
The ILWU contract negotiations have typically been more challenging, with a major focus on automation and technology-meaning they typically want to avoid these as it would result in less employees needed. The ILA contract negotiations have typically been more civil. However, recently the ILA filed a $200M lawsuit against management and a carrier for the use of non-union employees at a new terminal in South Carolina. The ILA currently operates in a hybrid model where non-union labor can be used for typical union positions. The lawsuit is an uncomfortable harbinger of potential negotiations in 2022. The previous ILWU contract was in negotiations in 2014 (extension agreed to in 2017).
There was never a strike or a lockout, but management and the ILWU engaged in tactics that crippled the ports on the West Coast. As bad as things became, vessels at anchor never came close to reaching the levels we have seen over the past few months. Given the recent lawsuits by the ILA, and the traditional negotiating strategies of the ILWU, 2022 could be an inflection point.
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