By Brooke Sutherland
(Bloomberg) — The International Longshoremen’s Association agreed to a new labor contract, ending 11 months of negotiations and eliminating the risk of the first Eastern port shutdown since 1977.
The union and the U.S. Maritime Alliance, which represents container-carrier companies, struck a tentative agreement. A dispute over the payouts drove the union to the brink of a strike in December before federal mediators secured an extension of talks and a tentative agreement on the fees.
“I am extremely pleased to announce that the parties have reached a tentative agreement for a comprehensive successor Master Agreement,” George Cohen, director of the Federal Mediation and Conciliation Service, which was working with the two parties, said in a statement.
Details of the agreement weren’t disclosed.
The resolution removes supply chain concerns retailers and manufacturers faced had the ILA followed through on its pledge to cease handling container cargo. A walkout would have affected ports from Maine to Texas that are responsible for 45 percent of U.S. commerce, according to the National Retail Federation.
“The last thing that the parties want is to be blamed for the reversal of fortunes for the economy,” Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts, said in a telephone interview. “Just when everything starts to look good, you don’t want to be the one who spoils it. There’s tremendous pressure on the parties. The consequences on the economy if it was a prolonged dispute would be disastrous.”
The ILA and the Maritime Alliance began negotiations in late March and reached tentative agreements in July on issues involving new technology and union jurisdiction over work on chassis used for cargo.
Talks between the two sides broke down in August and again in December over an attempt by the management group to cap container royalty payments that the ILA called “untouchable.” The payouts, which are used to supplement wages, totaled $211 million last year, or an average of $10 per man hour, according to the MaritimeAlliance.
Federal mediators, who had overseen negotiations since September, brokered a tentative agreement on the fees on Dec. 28, one day before the deadline that the union said would prompt it to strike. Cohen declined to give more details on the payment agreement at the time.
The deadlock in negotiations in December spurred the National Retail Federation and Florida Governor Rick Scott to urge President Barack Obama to intervene. With the risk of a strike now abated, Obama can avoid invoking the Taft-Hartley Act, a 1947 law viewed as anti-labor by unions that empowers the president to intervene in strikes that create national emergencies.
With more than half of the nation’s containerized shipments passing through East Coast and Gulf Coast ports, a strike would have affected imports and exports accounting for $454 billion of U.S. trade in 2011, according to data compiled by Jock O’Connell, international trade adviser for Los Angeles-based Beacon Economics LLC.