On January 8, The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) announced that they have reached a tentative agreement on all items for a new six-year Master Contract.
The two sides agreed to continue to operate under the current contract until the union can meet with its full wage scale committee and schedule a ratification vote, and USMX members can ratify the terms of the final contract.
“We are pleased to announce that ILA and USMX have reached a tentative agreement on a new six-year ILA-USMX Master Contract, subject to ratification, thus averting any work stoppage on January 15, 2025,” the two sides said in a joint statement. “This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coasts ports – making them safer and more efficient and creating the capacity they need to keep our supply chains strong. This is a win-win agreement that creates ILA jobs, supports American consumers and businesses, and keeps the American economy the key hub of the global marketplace.”
Acting Secretary of Labor Julie Su issued the following statement on the tentative agreement:
“Congratulations to the International Longshoremen’s Association and U.S. Maritime Alliance on reaching a tentative agreement that will give workers security and ensure continued prosperity for America’s shipping industry. This administration has stood strong with workers every day and been unwavering in its view that when workers have a say and unions are strong, everybody wins – and contracts like this are proof. The parties sat together, tackled difficult issues, and in doing so have protected workers’ progress and ensured continued benefits for years to come.”
Jonathan Gold, vice president of supply chain and customs policy with the National Retail Federation (NRF), issued the following statement:
“Providing certainty with a new contract and avoiding further disruptions is paramount to ensure retail goods arrive in a timely manner for consumers. The agreement will also pave the way for much-needed modernization efforts, which are essential for future growth at these ports and the overall resiliency of our nation’s supply chain.”
In December, NRF sent a letter signed by more than 260 groups to the parties urging them to return to the negotiation table.
A key sticking point in the strike in October by 45,000 longshoremen, was the concern that semi-automated cranes would replace workers. An anonymous source told AP that the agreement would give the ports more leeway to introduce modernizing technology. But as a concession to the union, they would have to hire new workers when they do, and full automation is off the table.
The strikes were set to begin on 15 January and would have forced the closure of ports from Maine to Texas. This has now been averted after a tentative agreement over a new six-year master contract was reached between the International Longshoremen’s Association (ILA), which represents port workers, and the US Maritime Alliance (USMX).
Effect on Industry
The potential of a strike, if the agreement hadn't been reached, was showing up costs, according to Xeneta, an ocean and air freight intelligence platform. The company noted that spot rates from the Far East to US East Coast had already increased 26% since December 14 and were expected to rise further had the strikes gone ahead.
Emily Stausbøll, Xeneta's senior shipping analyst, said in a statement, “The agreement between the ILA and USMX must be welcomed because a strike had the potential to be a supply chain and economic disaster, but it still highlights the difficulties facing shippers in managing supply chain risk.”
She added, “We have seen average spot rates on the trade from the Far East to US East Coast spike 26% since mid-December to stand at $6800 per FEU (40ft container), with carriers poised to add further disruption surcharges up to $3000 per FEU should the strike have gone ahead. It is extremely difficult for shippers to protect supply chains and manage freight spend with this level of uncertainty and when the stakes are so high.”
Stausbøll said that spot rates may now begin to fall, but shippers still face other supply chain threats in 2025. “Looking ahead, it is likely spot rate growth will now soften on trades into the US from the Far East, suggesting a brighter outlook for shippers negotiating new long term contracts. Signs of a weakening underlying global market in 2025 are also seen in falling average spot rates from the Far East to North Europe in January, which had spiked 51% between 31 October and 1 December last year.”
Shippers must remain cautious, she pointed out, “because it will not take much for freight rates to begin spiralling once again, particularly given the ongoing conflict in the Red Sea and the return of Trump to the White House, which could escalate the US-China trade war.”
