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Dockworkers at ports from Boston to Houston interrupt union negotiations

(Bloomberg) — The union representing dockworkers at East Coast and Gulf container ports suspended labor contract negotiations scheduled for Tuesday, citing a dispute over automation.

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The breakup comes less than four months before the September 30 expiration of the current six-year agreement between the International Longshore Association and the American Maritime Alliance, which represents ocean carriers and terminal operators. The agreement covers approximately 45,000 dockworkers from Boston to Houston, including six of the ten busiest U.S. ports.

The standoff also comes as a new wave of global shipping disruptions pushes ocean freight rates to levels not seen since the pandemic.

Local agreements were in place at nearly all 14 ports covered by the ILA-USMX master contract when talks broke down at the Port of Mobile, Alabama, late last week, according to a person familiar with the negotiations. The dispute stems from the automated technology APM Terminals uses to process trucks, which the union says is a violation of the contract.

“There is no point trying to negotiate a new deal with the USMX while one of its major companies continues to violate our current deal for the sole purpose of eliminating ILA jobs through automation ” said ILA President Harold Daggett in a statement. The USMX declined to comment.

A spokesperson said AP Moeller-Maersk and APM Terminals, which is owned by the Danish carrier, remained fully compliant with the employment contract and would work with the ILA and other stakeholders to address concerns.

“We are disappointed that the ILA has chosen to make certain details of ongoing negotiations public in an effort to create additional leverage for their other demands,” the Maersk spokesperson said on Monday.

The ILA has not had a national strike since 1977, but it will likely be difficult to reach a new agreement this summer. Even without the dispute over automation in Alabama, unions and industry groups are sharply divergent on wage increases.

The ILA is demanding wage increases to compensate for inflation and a share of the extraordinary profits won by liners during the pandemic. He’s asking for more than the 32 percent increase his West Coast counterparts got last summer, according to the person familiar with the negotiations.

Headache at the White House

The union said the automation issue must be resolved before high-level wage negotiations can continue.

“With less than four months until the contract expires, the ILA has very little confidence that these issues will be resolved in time,” the ILA statement said.

The negotiations could also be a political headache for the White House, which stepped in last summer to help broker a deal when contract talks hit a wall on the West Coast. That contract expires just weeks before the presidential election, and unlike ports in California and Washington state, the container hubs from Houston to Charleston are in deep red states. The ILA on Monday called on President Joe Biden to “recognize the threat posed by foreign companies trying to undermine American jobs.”

The halt in negotiations is “very disappointing” and should resume as soon as possible, said Jessica Dankert, vice president of supply chain at the Retail Industry Leaders Association.

“Together, the East Coast and Gulf gateways handle the majority of U.S. container traffic, and supply chains cannot afford the uncertainty of potential disruption due to labor action — especially as we approach peak shipping season for retailers,” she said Monday.

The risk of a major disruption will increase as negotiations drag on and as each side gains leverage, said Koray Köse, industry director at Everstream Analytics, a blockchain risk assessment firm. ‘supply. “It’s going to get very hot if this issue isn’t resolved quickly enough.”

The shipping sector, meanwhile, is being strained by a number of other issues, including attacks on ships in the Red Sea, which have caused traffic jams and stretched capacity on other trade lanes , said Köse. Looming tariffs also encourage importers to deliver their goods before global trade wars escalate. Negotiations over the ILA contract risk inflating container rates that are already rising as the summer progresses, he said.

Taking all these factors into account, as well as the approach of the US elections, Köse said: “you basically have the perfect storm for failure.”

(Updated with comments from Retail Industry Leaders Association in 13th and 14th paragraphs)

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