The International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) have reached a tentative agreement on a new six-year Master Contract, helping to provide stability for East and Gulf Coast ports. The agreement, announced on January 8, 2025, prevents a potential work stoppage scheduled for January 15.

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In a joint statement, the ILA and USMX highlighted the agreement's importance: "This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports – making them safer and more efficient, and creating the capacity they need to keep our supply chains strong."

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The contract, which is subject to ratification by both parties, supports job creation and port efficiency while helping sustain the U.S. economy's role in global trade. Further details will remain confidential until the review and approval process is complete.

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This milestone agreement marks a collaborative step forward for the maritime industry, ensuring stability and growth in the years to come.

As you may have seen in recent news, labor negotiations between the ILA and the USMX remain unresolved. While a tentative agreement was reached in October 2024 to extend the Master Contract until January 15, 2025, key issues are still under negotiation, raising concerns about potential port disruptions.

Despite ongoing efforts to reach a resolution, the risk of disruption is increasing as the deadline approaches, though the situation remains dynamic.

Current Negotiation Status:

• Tentative Agreement: On October 3, 2024, ILA and USMX reached a tentative agreement on wages and extended the Master Contract until January 15, 2025. This extension allows both parties to continue negotiations on outstanding issues.
• Concerns Over Automation: The ILA has expressed strong opposition to any form of automation that could jeopardize jobs. While they support modernization that enhances efficiency, they insist that it should not come at the cost of job losses. The ongoing discussions have become increasingly tense as both sides strive to find common ground.

Potential for Disruption:

As negotiations remain stalled, the risk of disruption at East and Gulf Coast ports is escalating. Stakeholders across various industries are urging both parties to reach a resolution to avoid further economic impacts.

Carrier Surcharges:

Proactively, several carriers, including CMA CGM, Hapag-Lloyd, and ZIM, have announced the implementation of surcharges due to the potential for labor disruptions:

• ZIM: Starting January 10, 2025, ZIM will implement an ILA Strike Surcharge for cargo moving to or from U.S. East Coast and Gulf ports. This surcharge will apply until further notice and is intended to cover additional costs incurred due to potential strikes or labor-related disruptions.

• Hapag-Lloyd: The company has introduced two surcharges—the Work Disruption Surcharge (WDS) and Work Interruption Destination Surcharge (WID)—effective January 20, 2025. These surcharges will cover additional costs from labor disruptions and will apply if a strike occurs.

• CMA CGM: Similar measures have been taken by CMA CGM, which has warned clients about potential surcharges for cargo moving in and out of U.S. East and Gulf Coast terminals in light of ongoing negotiations.

As the deadline draws near, it is anticipated that all carriers will implement similar surcharges. As we continue to monitor developments, JAS as well reserves the right to activate the BWL congestion surcharges should any actions be taken by the ILA.

Impact of Previous Strike Action:

The previous three-day strike in October 2024 caused significant delays and operational disruptions, affecting:

• 36 ports handling over half of U.S. container volume.
• Increased fees for freight storage and detention.
• Prolonged transit times due to vessel rerouting.

Mitigating Future Disruptions:

To minimize risks, businesses should consider these strategies:

• Divert shipments to alternate ports, such as those on the West Coast.
• Anticipate congestion at rerouted locations.
• Leverage air freight for time-sensitive cargo.
• Utilize intermodal solutions for inland transportation.
• Be prepared for increased shipping costs and fees.
• Stay informed and work proactively with logistics partners to reduce delays.

Guidance from JAS:

JAS Worldwide continues to support clients during this uncertain period. Businesses are encouraged to prepare for potential disruptions by exploring alternative routing options and staying informed about ongoing negotiations. JAS is available to provide tailored solutions to help mitigate risks associated with these developments.As the January deadline approaches, both parties must work diligently to resolve their differences and secure a stable working environment for longshore workers and businesses alike.

Potential for Renewed ILA Strike Over Automation Disputes

Negotiations between the International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) have reached a critical impasse, primarily due to disagreements over port automation. After walking away from talks in November 2024, the ILA has signaled the possibility of a renewed strike if their demands are not addressed before the January 15, 2025, deadline.

This situation follows a previous three-day strike in early October 2024, which temporarily halted operations at ports along the East and Gulf Coasts. While those ports have since resumed operations, the disruption caused widespread delays and financial strain on the U.S. economy. The recent suspension of strike action was agreed upon for 90 days, ending January 15, 2025, but with negotiations stalled, the risk of further disruption looms large.

Impact of Previous Strike Action

The October strike caused significant delays, cost overruns, and operational disruptions, including:

• Shutdowns at 36 ports handling over half of U.S. container volume.
• Increased fees for freight storage, detention, and other services.
• Prolonged transit times due to vessel rerouting.
• Downstream effects on retailers and supply chains during peak season.

Mitigating Future Disruptions

To minimize risks, businesses should consider these strategies:

1. Divert shipments to alternate ports, such as those on the West Coast.
2. Anticipate congestion at rerouted locations.
3. Leverage air freight for time-sensitive cargo.
4. Utilize intermodal solutions for inland transportation.
5. Be prepared for increased shipping costs and fees.
6. Stay informed and work proactively with logistics partners to reduce delays.

Guidance from JAS

JAS remains committed to supporting clients during these uncertain times. If your operations are at risk of being impacted, we strongly encourage you to reach out to your JAS representative. Our team can provide tailored solutions to mitigate disruptions, streamline supply chains, and optimize freight options. Whether through alternative routing, expedited services, or strategic planning, JAS is here to help you navigate these challenges effectively.