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October 04, 2024

Port Workers End Strike; Promo Breathes Sighs of Relief

Promo leaders were relieved at the news that a tentative agreement on wages was enough to get dockworkers back to their duties. Still, a full master contract needs to be worked out.

By  Christopher Ruvo

The International Longshoreman’s Association (ILA) said that its approximately 50,000 striking members will return to work on Friday, Oct. 4 at East & Gulf coast ports after the union and the U.S. Maritime Alliance (USMX), a management group that represents shipping carriers, terminal operators and port authorities, reached a tentative agreement regarding wage increases for the dockworkers.

The unionized port workers had walked off the job at midnight Oct. 1, launching a strike that by one estimate would cost the United States’ economy $3.78 billion a week and disrupt the supply chains of a spectrum of industries, including food, pharmaceuticals, apparel, automotive and promotional products.

cargo port in NY

Promo industry leaders were breathing sighs of relief early Friday that the strike was short-lived, saying that any deleterious effects on the industry’s supply lines should be minimal.

“Obviously, we think this is great news for our economy, and more specifically for our industry and company,” said Frank Carpenito, president/CEO of Counselor Top 40 supplier Gemline (asi/56070) and a member of Counselor’s Power 50 list of promo’s most influential people. “We made an educated bet many months ago that the dockworkers would strike, but it would last no longer than two weeks, so this time around, we got it right.”

Carpenito continued: “We’re not anticipating any impacts from the strike, given the shortness of the work stoppage. That said, a three-day strike could take as long as 15 days for a full system recovery, so some companies may be subject to short-term impacts.”

When dockworkers ditched their jobs Oct. 1, the immediate word from promo suppliers was that a relatively short strike – one lasting less than a week or two – would not have a noticeable impact on industry inventory levels or trigger the need to raise pricing on products they sell to distributors.

However, they said that if the massive port shutdown dragged on, it could cause delays in getting products made overseas landed and stocked stateside, while sending importing/shipping costs soaring. Such ills, if prolonged enough, could lead to inventory shortages in promo and higher pricing on products.

Like Carpenito, Jing Rong, vice president of supply chain and sustainability at Counselor Top 40 supplier HPG (asi/61966), was heartened to see dockworkers leaving the picket lines and resuming their duties. Still, she noted the port situation needs some unpacking to get back to normal – literally.

“We’re very happy about the tentative deal,” Rong told ASI Media. “Now we just have to deal with the port congestion that was caused by the three days of strike. There are five-to-six times normal ship volume waiting near port. That will probably take two to three weeks to clear. Nonetheless, we like certainty and can deal with that.”

Like Rong and Carpenitio, Yuhling Lu, co-owner of Counselor Top 40 supplier Ariel Premium Supply (asi/36730), told ASI Media that she doesn’t expect there to be significant effects on promo because of the strike. “I am very relieved that a tentative agreement was reached so quickly,” she said. “I believe the ports will do their best to catch up in the coming few days.”

HPG CEO Chris Anderson, a member of Counselor’s Power 50, noted that while the immediate crisis of the strike is over, the broader global supply chain is still experiencing pressure. Clogged ports in Asia and Europe, along with militant attacks in the Red Sea that are forcing cargo ships to take longer routes, have been causing challenges, cost hikes and delays in shipping for months. Those things haven’t disappeared.

“We are not out of the woods,” Anderson told ASI Media. “Smart suppliers are increasing safety stocks and padding transit time calculations.”

Frank Carpenito“We’re not anticipating any impacts from the strike, given the shortness of the work stoppage. That said, a three-day strike could take as long as 15 days for a full system recovery, so some companies may be subject to short-term impacts.” Frank Carpenito, Gemline (asi/56070)

The Tentative Deal

The union members launched the work stoppage after their previous master contract expired on Oct. 1 without a new deal being inked. The ILA said that the tentative agreement on wages means that union leaders and USMX will now return to the bargaining table to negotiate a full new master contract. Per the arrangement, the master contract that had expired Oct. 1 was extended until January 15, 2025.

CNN reported that the offer from USMX amounts to a 62% increase in wages for port workers over the six-year life of the contract. Any final master contract would have to be approved by rank-and-file members of the ILA, the largest longshoreman’s union in North America with approximately 85,000 members.

Acting U.S. Secretary of Labor Julie Su was reportedly involved in the preliminary talks that resulted in the tentative agreement on wages.

“I congratulate the International Longshoremen’s Association and the United States Maritime Alliance for reaching a tentative agreement on a strong wage package that allows the East Coast and Gulf ports to reopen while the parties finish bargaining on a new contract,” Su said in statement.

Whether a master contract will be approved before the January 15 deadline remains to be seen. A key sticking point is likely to be the use of automation at the ports.

Union leadership has said it’s against any automation or semi-automaton that could threaten jobs. A dispute over the alleged use of automation at some ports was one key factor that resulted in talks between the ILA and USMX breaking down over the summer. Critics of the union’s position assert East and Gulf Coast ports have become inefficient compared to certain counterparts overseas due to lack of automation.