Bloomberg News

U.S. East, Gulf Coast Ports to Resume Talks to Avoid Strike

September 06, 2012

Contract negotiations covering workers at 14 U.S. East Coast and Gulf Coast ports will resume the week of Sept. 17 with federal mediators in an attempt to prevent a walkout that would disrupt holiday shipping.

The International Longshoremen’s Association and the U.S. Maritime Alliance will hold talks under the authority of the Federal Mediation and Conciliation Service, John Arnold, a spokesman for the agency, said in a telephone interview today. The location and content of the negotiations, which had broken down Aug. 22 over wages and benefits, isn’t being disclosed.

“It’s good to see they’re back at the table and hopefully can come to an agreement before trade gets disrupted,” David Vernon, a New York-based analyst at Sanford C. Bernstein & Co., said in a telephone interview. “As long as they’re at the table and they’re working on it, that’s a positive.”

The two sides are faced with the Sept. 30 expiration of a master contract that covers more than 14,500 jobs at ports that according to the management group handled 95 percent of container shipments last year in an area running from Maine to Texas. The union said on Aug. 31 that it was “making preparations” for a possible strike on Oct. 1.

The two sides 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 intermodal cargo containers that can move by sea, rail or truck. Such containers are often used to transport consumer goods.

The union and the port management group voluntarily agreed to mediation, Arnold said. Mediators will assist “in negotiations with the goal of helping them reach a mutually acceptable agreement,” he said.

‘Contingency Plans’

Groups such as the Retail Industry Leaders Association and the National Retail Federation have urged the two sides to resume talks. The National Industrial Transportation League in an Aug. 29 letter also asked U.S. Transportation Secretary Ray LaHood to encourage the union and ports group to return to the bargaining table.

“Many companies are making contingency plans, but clearly even the best plans will be problematic in the event of a full- scale shutdown at East and Gulf Coast ports,” Peter Gatti, executive vice president of the league, said in a Sept. 4 telephone interview. “Even the potential shift of that freight will put extraordinary demands on all modes of transportation, particularly for rail.”

Norfolk Southern

About 60 percent of Norfolk Southern Corp. (NSC:US)’s international intermodal business comes through East Coast ports, said Robin Chapman, a spokesman for the Norfolk, Virginia-based railroad. Norfolk Southern is developing contingency plans with each East Coast port and is prepared to accommodate intermodal traffic from either coast, he said.

The company isn’t able to forecast the effect of a strike or lockout on its revenue or earnings, Chapman said.

Scott Group, an analyst in New York at Wolfe Trahan & Co., estimated in an Aug. 30 note to clients that Norfolk Southern would lose $19.7 million in revenue in a one-week port strike and $84.5 million should a shutdown last a month.

Railroads in the western U.S. and Canada such as Omaha, Nebraska-based Union Pacific Corp. (UNP:US) and Warren Buffett’s Burlington Northern (A:US) Santa Fe could gain business from freight shifts to western ports, he said. CSX Corp. (CSX:US), based in Jacksonville, Florida, and Norfolk Southern might also see long- haul business for cargo ultimately destined for the eastern U.S., Group said.

Burlington Northern is “not aware of any significant diversions of freight due to the uncertainty of the ILA negotiations,” Krista York-Woolley, a spokeswoman for the Fort Worth, Texas-based railroad, said in an e-mail. The railroad is prepared to handle additional business, she said.

2002 Lockout

In 2002, U.S. West Coast ports closed for 10 days after the Pacific Maritime Association locked out members of the International Longshore and Warehouse union, who it said were intentionally slowing down work.

President George W. Bush stepped in to halt that shutdown, which cost the U.S. economy more than $1 billion a day by White House estimates. Bush under federal labor law obtained a court order in October 2002 to suspend the lockout, and the two sides reached a tentative agreement the next month.

To contact the reporter on this story: Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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Companies Mentioned

  • NSC
    (Norfolk Southern Corp)
    • $108.17 USD
    • 0.28
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  • UNP
    (Union Pacific Corp)
    • $107.04 USD
    • 0.03
    • 0.03%
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