ILA-USMX Talks to Restart on Jan. 7 Amid Rising Shipping Rates

The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) are set to restart labor talks on Jan. 7, after months of stalled negotiations regarding wage increases, automation, and labor conditions. 

The ILA initiated a strike on Oct. 1 following the expiration of the Master Contract on Sep. 30. The strike caused significant disruptions at US ports, with concerns growing about supply chain delays. Experts warn that for every day of the strike, it could take five to seven days to clear the existing backlogs, exacerbating the challenges faced by importers, exporters, and consumers alike.

The ILA and USMX reached a tentative agreement to extend their current contract until Jan. 15, 2025. The extension aims to provide a temporary resolution while both sides continue to negotiate the terms of the new Master Contract.

The Role of Technology and Automation

One of the central points of contention is the role of automation in port operations. The USMX has been vocal about the need for modernization and technological investments to improve port efficiency and capacity. USMX emphasizes that these advances are crucial for building a sustainable, greener future for the US maritime industry. With limited available land at most US ports, the only viable option for increasing capacity is to densify existing terminal spaces, allowing for the movement of more cargo within the same physical footprint.

The ILA strongly opposes the introduction of further automation at ports, particularly the use of Auto Gate systems, which allow trucks to be processed without human labor. The ILA claims that this technology eliminates jobs, while the USMX argues that the implementation of modern technology can create more opportunities for union workers. 

Donald Trump Meeting 

President-elect Donald Trump met with ILA representatives in December. He expressed his strong support for ILA longshore workers, particularly in their fight against automation, which he claims could harm US workers and their families. Trump’s statement resonated with many, including ILA leaders, who argue that automation threatens not only jobs but also the livelihoods of longshore workers.

In response, the USMX reiterated their position that automation is vital for strengthening US ports and supply chains. It highlighted that modern technology improves worker safety, enhances productivity, and increases the capacity of ports, all of which directly benefit both ILA members and the broader US economy.

Wage Increases and Job Growth

Despite the ongoing debates, USMX has made significant strides in negotiating a wage increase for ILA members. A tentative agreement includes a historic 62% wage increase over the next six years, demonstrating a commitment to supporting American workers. USMX has emphasized that this wage boost is directly tied to the implementation of modern technology, which will increase port capacity and create more high-paying jobs.

Shipping Rates Surge Amid Uncertainty

As the January 2025 deadline for a potential strike approaches, shipping rates have already begun to rise. According to supply chain advisors Drewry, global average rates for shipping containers surged by 3% last week, with rates to US East and Gulf Coast ports rising even higher. Rates from Shanghai to New York rose by 6%, and from Shanghai to Los Angeles by 7%. This price increase is attributed to a combination of factors, including concerns over the looming ILA strike, anticipated tariff hikes under the incoming Trump Administration, and heightened demand ahead of the Lunar New Year.

Ocean freight rates are averaging 134% higher than last year, and analysts expect this trend to continue through January, driven by front-loading as shippers attempt to avoid potential disruptions. This has created a supply-demand imbalance, which is further supported by the Red Sea Crisis and ongoing changes in carrier alliances.

In anticipation of potential labor disruptions, major shipping lines have implemented contingency measures. Maersk has encouraged customers to pick up their containers before Jan. 15 to mitigate disruptions, while ZIM, Hapag-Lloyd, and CMA CGM have announced surcharges for cargo moving to or from US East and Gulf Coast ports. These surcharges are designed to offset the additional costs incurred due to the uncertainty surrounding the labor situation.