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Global Category Intelligence

Q2 2025

ALERT: New Tentative Deal Averts Strike

Latest Update: 13 January 2025

UPDATE: 13 January 2025

As noted below, the ILA/USMX tentative agreement, reached on Wednesday night, January 8, addresses key issues, including automation, by protecting current jobs while allowing for the introduction of new technologies aimed at modernizing port operations and enhancing efficiency.

Details of the agreement are not disclosed until both parties have reviewed and ratified the contract, which may take weeks. In the meantime, the ILA and USMX agreed to continue operating under the current contract until the tentative agreement is ratified.

Economic Implications

The announcement of this tentative agreement, averting a likely major strike along the ports on the East and Gulf coasts, had immediate economic implications.

Shares of major shipping companies, which had risen in anticipation of a potential strike, declined following the news, according to the Financial Times, resulting in a combined market value loss of approximately $5 billion for the three largest listed shipping groups.
Reaching an agreement to avert a significant port strike is expected to stabilize supply chains and cargo prices, relieving businesses that rely on these ports to move goods.

Preventing a strike is particularly significant given the potential economic repercussions that could have arisen from disruptions in port operations. The National Retail Federation, representing major customers like Walmart and Target, said the agreement should bring certainty back to ocean shipping by reducing the risk of disruptions at East and Gulf Coast ports that handle more than half of U.S. container imports.

Impact on Labor Relations

We’ll monitor this closely. This agreement might serve as a model for other labor negotiations across industries, particularly those dealing with similar issues like automation and job security. It could also influence how labor unions and management negotiate in the future, impacting labor peace and economic outcomes across sectors.

9 January Update

Late last night, the International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) reached a tentative agreement on automation, thus avoiding a potentially devasting port strike. While the specific terms of the agreement have not been disclosed, both parties indicate that the deal, if approved by the union members, would allow for technological upgrades at ports while ensuring the creation of new jobs linked to the latest equipment. This deal, just days before the contract extension's expiration, aims to modernize port operations without reducing the workforce, thus averting a potential strike.

Stay tuned to this space as we update with new information.

8 January Update

As the January 15, 2025, deadline for the Master Contract extension between the ILA and the USMX approaches, the primary sticking point of contention is port automation, especially the use of semi-automated cranes.

The ILA and USMX held a secret meeting on January 6, 2025, to discuss port automation, signaling an attempt to make progress before the looming strike deadline.

Automation in Ports

Port automation, including semi-automated systems like rail-mounted gantry cranes (RMGs), promises operational benefits such as faster container handling, improved safety, and reduced costs over time. Ports adopting these technologies often report shorter dwell times and greater consistency in meeting shipping schedules. However, implementing the technology requires substantial upfront capital investments and, more critically, a steep social cost: reduced demand for human labor.

Although automated RMBs can perform many tasks traditionally handled by longshoremen, automation is also problematic because it creates higher skill requirements. Retraining workers is costly and time-consuming, and it may lead companies to prioritize new hires rather than upskilling current workers.

The ILA has made its stance clear, strongly opposing the widespread implementation of automation and semi-automation in ports. Unlike their counterparts on the U.S. West Coast, who recently negotiated terms around automation, the ILA’s resistance reflects concerns over job losses and changes to traditional work structures.

Impact on Labor and Port Operations

Automation changes the nature of work for longshoremen, reducing the need for certain roles while requiring new technical skills for operating and maintaining automated equipment. Rail-mounted gantry cranes, for instance, can operate with minimal human intervention once installed, handling containers at faster rates and with greater precision than traditional methods.

For labor unions like the ILA, this shift represents not only an immediate threat to job security but also a broader challenge to their influence in negotiating workforce terms. The ILA has emphasized that automation disrupts livelihoods and weakens unionized labor's collective bargaining power.

From an operational perspective, ports equipped with automation—such as those in Europe and parts of Asia—have demonstrated greater resilience during labor disputes and unexpected surges in demand. However, this adaptability has often come at the cost of increased tension between port authorities and unions.

Procurement and Supply Chain Implications

For procurement and supply chain professionals, the automation debate introduces planning and risk management complexity.

Supply Chain Efficiency vs. Labor Disruptions

While automation can streamline operations and reduce overall costs, labor resistance increases the risk of strikes and work stoppages, potentially offsetting any gains. The U.S. East and Gulf Coast ports remain critical gateways for imports, and extended disruptions could create significant bottlenecks.

Workarounds and Strategies

If negotiations between the ILA and USMX fail, the disruptions could make existing challenges, especially during the pre-Lunar New Year shipping rush. To mitigate risks, procurement teams should:

Evaluate Alternative Gateways: Ports outside the ILA's jurisdiction, such as those in Mexico or Canada, could serve as contingency options. However, increased volume at these ports might require adjustments to inland transport strategies.
Engage Freight Forwarders Early: Shippers should work closely with forwarders to secure capacity at less-affected ports or alternative modes of transport, such as air freight for high-value goods.
Diversify Manufacturing Locations: Companies reliant on JIT manufacturing may need to reassess supplier locations and inventory strategies to ensure continuity.
Advocate for Transparency: Maintain open communication with logistics providers to anticipate delays and adjust delivery expectations accordingly.

Long-Term Trends in Automation

Despite labor resistance, the global trend toward automation in port operations is unlikely to slow. Key drivers include rising labor costs, increasing global trade volumes, and pressure to reduce emissions through optimized operations. Rail-mounted gantry cranes and similar technologies represent a balancing act between cost efficiency and workforce impacts.

Procurement professionals should remain engaged in this evolving conversation, recognizing that port automation is both a challenge and an opportunity. Understanding the broader implications of automation -- regarding immediate risks and long-term benefits -- is essential for navigating the logistics landscape in 2025.