US ports may be headed for some major labor strife

on February 25, 2013

The ocean freight industry is hurting and will continue to hurt in 2013 say many analysts.   US ports are now under significant pressure to reduce costs as the entire industry suffers from lower volume.    The primary customers of the ports are shipping lines and most of them are operating at significant losses.    Many ports are pushing hard to reduce costs to get ready for the completion of the Panama Canal expansion in 2014.

The push to reduce costs is creating tensions between the ports and unionized dock workers.   Union dock workers are among the highest paid blue collar workers in the country.  US ports are rated among the worst in terms of efficiency when compared to other countries.   Many ports will be pushing for more flexibility and lower wages to keep competitive with non-unionized ports.   For example the Jacksonville port has more flexible hours and can operate with less staffing because it is not unionized.   Unionized ports along the East coast will lose business unless they can find a way to reduce costs.

Unions will surely put up a fight.   There have already been contentious negotiations with the longshoreman over cargo royalty payments.  Currently there are over 14,000 unionized dock workers along the east coast.   There could be dockworker strikes in 2013 and 2014 as ports have little options but to reduce costs and unions have not shown a willingness to give up much.

Shutting down major sea ports will cost the US economy, it is doubtful that any strike would go long without attempted intervention by the US government.   Some regard the existing presidential administration as the most labor friendly White House in over 50 years.   But President Obama’s loyalty to organized labor will certainly be tested if the economy loses over a billion dollars per day due to an extensive dockworker strike.