Last year, I wrote about the importance of maintaining normal labor relations between the International Longshoreman’s Association and industry management in anticipation of new negotiations for a new contact in September 2012.
Last July a new president was elected by the ILA. If some of the speeches at the ILA Convention are any measure, it is difficult to imagine smooth negotiations toward the 2012 contract. The master contract extension was for two years, expiring Sept. 30 2012 plus modification to the final year of the original agreement.
The contract extension was, by management standards, considered to be very generous. The extension allowed for the gradual removal of tiered rates and elimination of the tonnage cap on container royalty payments. These both were tremendous money items. Container royalty alone could be a $500 million program in 2012.
A second critical issue to be watched is the fierce competition for a shrinking international market that is causing the ocean carriers to lose billions of dollars. Competition on major routes is at an all-time high. This is a highly volatile situation that will accelerate in 2012.