Biden Hails East Coast Port Deal in Surprise White House Briefing
A day after union dockworkers at the East Coast and Gulf Coast ports reached a tentative agreement on wages to suspend a three-day strike, President Joe Biden hailed the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) for “critical progress toward a strong contract.”
President Biden made a surprise press appearance at Friday’s White House press briefing, his first-ever appearance at the daily meetings, to tout the day’s strong jobs report alongside the ILA-USMX agreement—emphasizing that the deal “shows the importance of collective bargaining.”
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The terms of the new deal have not been disclosed, but a Wall Street Journal report indicates ILA workers will receive a 62 percent wage increase over six years.
TD Cowen transportation analyst Jason Seidl, who spoke with investors close to the talks earlier this week, told Sourcing Journal the parties agreed on “formulating a plan on how to move forward on automation for the unions and the employers.”
While Seidl didn’t outline specific terms of what that kind of deal would entail, the agreement mirrors that of information shared by container shipping expert and Campbell University associate professor Sal Mercogliano. Just minutes before the deal’s official announcement, Mercogliano posted on X that the ILA and the USMX would form a committee to examine automation in the ports.
When asked Thursday on LiveNow from Fox about whether the ILA can coexist with new automation projects, Mercogliano said that it depends on the technology and purpose.
“You can put in automation that improves the data that allows for the movement of containers through the ports, where you don’t replace all the longshoremen,” Mercogliano said. “You can put in a phase plan where you start introducing automation into the port as workers retire. For the shipping companies, automating a terminal the size of some U.S. terminals in New York, New Jersey, Savannah and Houston—it’s a massive infrastructure payment. It doesn’t really save them money.”
While the union is pushing for automation language to change from the current extended contract, the ocean carriers and terminals sought to retain that language in a new deal.
Under those terms, the ports were not allowed to use fully automated terminals or equipment, with the technology defined as “machinery/equipment devoid of human interaction.” The terms also require that the terminals didn’t implement semi-automated equipment or technology “until both parties agree to workforce protections and staffing levels.”
So what remains left to figure out in the contract?
“There’s going to be seniority, there’s going to be some benefits,” Seidl said. “All this other stuff around the edges probably hasn’t been worked out yet, and that’s probably what needs to be negotiated between now and the January deadline.”
With three months to iron out a new deal, Seidl says it’s still “too early to know if there’s any pushback” from the ILA if more sticking points arise.
If a strike situation occurs again on Jan. 15, it would have fewer political undertones tied to it since the November presidential election will have passed.
“A lot of the politics can get taken out by the time January rolls around, almost regardless of who’s in the White House,” Seidl said. “You don’t have that political lever that you have now.”
January also happens to be a seasonal slow point for freight in the aftermath of the holiday season ahead of the Lunar New Year, Seidl pointed out, making a potential second strike less impactful.
Case in point—inbound cargo volume totaled 1.96 million 20-foot equivalent units (TEUs) in January and 1.96 million TEUs in February, down from the July year high of 2.32 million TEUs and August’s projected year high of 2.37 million TEUs, according to the Global Port Tracker.
“There’s less cargo typically flowing through in January, so it’s, it’s a little bit better situation than where we are now,” Seidl said. But he noted that even for the recent strike, shippers had general put themselves in a better position in anticipating a work stoppage by importing goods earlier.
However, Peter Sand, chief analyst at freight benchmarking platform Xeneta, issued warnings in a Friday blog post that the backlogs in the wake of the three-day port closure could persist into the usually slow season.
“The dozens of ships delayed on the U.S. East Coast and Gulf Coast will also be late arriving back in the Far East,” Sand said. “This will impact schedules towards the end of this year and possibly into 2025 in the run-up to Lunar New Year at the end of January, which traditionally sees an increase in goods shipped out of the Far East. You cannot miss a scheduled weekly sailing for a ship carrying 15,000 containers and not expect repercussions for carriers and importers.”
Additionally, some shippers will now face the challenge of having to recover containers discharged at other ports outside of the U.S. such as in the Bahamas, as carriers had to manage the situation in the interim.
According to supply chain risk management firm Everstream Analytics, the number of container ships waiting outside of U.S. Gulf and East Coast ports decreased again overnight to 54, down from the peak Thursday afternoon of 59.
This was largely due to ships moving into the ports like Savannah and Charleston, in anticipation of container terminals reopening in the morning.
The queue outside the Port of New York & New Jersey increased since yesterday as ships are still waiting in the anchorage area.
As of Thursday morning, there were still 18 ships waiting outside of New York & New, followed by Savannah with 10 and Norfolk with nine, Everstream said.
In a press conference at 11:30 a.m., New York/New Jersey port director Bethann Rooney said 11 of the ships were being brought into the port terminals so they could begin unloading the cargo onboard.
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