Longshoremen strike threatens to shut down East Coast

Joe Raedle / Getty Images / AFP
More than 14,000 longshoremen threatened to go on strike Sunday, thereby bringing commerce to a standstill at ports across the US. But the union representing the workers agreed to avert its strike for 30 days while it negotiates with port operators.

The union representing more than 14,000 longshoremen originally planned to begin a strike on Sunday, which would close cargo ports on the East Coast and the Gulf of Mexico. Container ships that contain products such as flat-screen TVs, sneakers, snow shovels and other types of products would all be rerouted or forced to float idle at sea. The 15 US ports that would have been affected by the strike are responsible for moving more than 100 million tons of goods each year, which is 40 percent of US cargo traffic, the Associated Press reports.

Port Authority in New York and New Jersey would have been hit hardest on the East Coast, since 3,250 longshoremen handled 32.3 million tons of cargo in 2010 and continue to bring in billions of dollars worth of goods.

Had the longshoremen gone through with the strike, the US economy would have taken a massive toll and instantly lost billions of dollars.

“If the port shuts down, nothing moves in or out,” Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation told AP. And even when the employees return to their jobs, “it’s going to take time to clear out that backlog, and we don’t know how long that it’s going to take.”

Most of the products that the US imports are transported via ship, since air transport is expensive.

“The global economy moves by water, and shutting down container ports along the East and Gulf coasts while the national economy remains fragile benefits no one,” Deborah Hadden, acting port director at Massport, told AP.

The longshoremen initially decided on the strike after port operators and shipping lines tried to restrict newer workers from receiving royalty payments based on the weight of the containers they handle, as well as put a cap on the payments delivered to current employees. The royalty payments have been made since the 1960s to compensate 14,640 employees at ports across the US. Each worker makes an average $15,500 a year from royalty payments, which would be reduced or deducted from their salaries if the port operators had their way.

The union claims the payments are essential for many of the employees whose jobs are being reduced by automatons that take over the labor.

The pay is “more important today for ILA members than it has ever been to keep America’s commerce moving with skilled, trained longshore workers,” the International Longshoremen’s Association said. In talks that have lasted for months, the union refused to agree to negotiate away their royalty payments, which has brought the talks to a standstill.

The Maritime Alliance claims that the longshoremen make a high enough salary without the royalty payments. Each worker makes an average $124,138 each year in wages and benefits. Between 1997 and Sept. 30, 2011, royalty payments cost employers $1.8 billion. And the costs have been on the rise each year, costing tens of millions of dollars that the Maritime Alliance believes is too much.

The president of the longshoremen, Harold Daggett, predicted a strike as early as Dec. 19, claiming that the talks were not going well. But after the union threatened to shut down commerce and cost the US economy billions of dollars at a time when a looming fiscal cliff is already threatening the economy, dockworkers struck a deal that would avert the strike for 30 days while negotiations continue.

The conditions of the deal have not been announced, but the head of the Federal Mediation and Conciliation Service, George Cohen, says it involves royalty payments. Union members previously said they would only agree to an extension of negotiations if the Maritime Alliance dropped its proposal to freeze royalties.

“We remain optimistic and hopeful that an amicable resolution to negotiations between the ILA and management can be reached,” Garry LaGrange, president and CEO of the Port of New Orleans, told CNN.