News / US port strike called off as ILA and USMX reach 'tentative' agreement

© Fedecandoniphoto

Shippers can breathe a sigh of relief, the east and Gulf coast port strike slated to start next week looks set to be called off – and freight rates could ease. 

Last night, despite much speculation to the contrary, the ILA and USMX came to a ‘tentative’ agreement  – on all items  – on a new six-year master contract. 

The two sides have agreed to continue under the current contract until the union can meet with its wage scale committee to schedule a ratification vote, and the USMX members can review and agree the terms of the new contract. 

“We are pleased to announce that ILA and USMX have reached a tentative agreement on a new six-year ILA-USMX master contract, subject to ratification, thus averting any work stoppage on 15 January 15,” the two sides said in a joint statement.  

“This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernising east and Gulf coast ports – making them safer and more efficient, and creating the capacity they need to keep our supply chains strong.” 

The agreement, if ratified, will also avert higher freight rates. Investment bank Bernstein said today: “The potential strike was one of the most important forces that would have seen freight rates rise in the early part of this year, as it would have meant an effective supply reduction of container capacity, with ships waiting, unproductive, for a berth.  

“There remains a possibility of a demand pull-forward ahead of new tariffs on US imports, which can yet support rates near-term — but is only a time-shifting of volumes, and if this transpires, we would expect a volume soft patch later on, as seen in 2018-19.” 

However, the bank said that pressure on freight rates would continue owing to the Red Sea crisis, but explained: “If and when this is resolved, we would expect a very rapid drop in pricing”. 

It added: “Freight forwarders would likely have been somewhat supported by a strike, as they would have been needed to help clients navigate the ensuing chaos — but the effect is much smaller.” 

The details of the deal, when revealed, will lead to much scrutiny of the jobs versus automation debate.

“The tentative agreement frames tech as a job-maker, not job-taker—a key compromise for modern supply chains,” said Judah Levine, head of research for Freightos.

“This is a six-year détente in the tech-versus-labor tug-of-war at US ports.

“Automation remains a lightning rod—and likely one we’ll see in other industries—but this deal suggests a cautious path forward.”

Meanwhile, the ILA credited president-elect Donald Trump for the agreement. 

In a message to Mr Trump on Facebook, the ILA said: “You have proven yourself one of the best friends of working men and women in the United States.” 

ILA president Harold Daggett said the meeting held with his son, Dennis, and Mr Trump at Mar-a-Lago last month was the “chief reason the ILA was able to win protections against automation for his 85,000 members”. 

“President Trump clearly demonstrated his unwavering support for our ILA union and longshore workers with his statement “heard round the world” backing our position to protect American longshore jobs against the ravages of automated terminals,” said Mr Daggett.

“President Trump’s bold stance helped prevent a second coast-wide strike at ports from Maine to Texas that would have occurred on January 15, 2024, if a tentative agreement was not reached.” 

Mr Trump had called USMX officials to express his support for the ILA as well as posting on social media. 

The ILA Leader said his union regards Mr Trump as “a hero to our ILA union and members” and added: “President Trump gets full credit for our successful tentative master contract agreement.” 

However, yesterday evening The Loadstar was still receiving reports that negotiations had fallen apart, with the already-agreed wage rise back on the table in exchange for less automation. The USMX and ILA said they would not disclose details of the deal until all the members of both parties had reviewed and approved. 

“This is a win-win agreement that creates ILA jobs, supports American consumers and businesses, and keeps the American economy the key hub of the global marketplace,” the parties said. 

Meanwhile, many shipping lines have already announced strike-related surcharges, but some have widened the scope, indicating that they could stay in place. 

Analyst Lars Jensen pointed out that MSC had announced identical emergency disruption surcharges from north Europe to both the US and Canada, citing  “the disruptions caused by the coming changes in the alliances network”, for the former, as well as a peak season surcharge for Canada.

“This clear discrepancy serves to undermine whatever credence there might be in the reasons provided for such surcharges,” said Mr Jensen.

Other observers suggested that, ultimately, costs would go up for shippers as ILA wages increased. But it’s a price shippers might willingly pay to avoid the far higher cost of a strike.