Getting hit from both sides

Category 1 Hurricane Isaac hit the Gulf coast this week, forcing terminal shutdowns, equipment lockdowns and emergency preparedness plans.

However fears of a ‘Katrina’ repeat were largely unrealised and New Orleans, Mobile, Pascagoula and Gulfport were all expected to re-open for business just one day after the storm passed.

Given the comparative lack of disruption to Gulf port operations, it is ironic that a manmade threat could instead seriously upset the status quo.

Just as retailers and consequently ports start gearing up a welcome boom in cargoes for the festive season, the East Coast longshoremen have thrown the possibility of a strike into the mix.

A breakdown in contract talks between the International Longshoremen’s Association and United States Maritime Alliance – made up of shipping lines and terminal operators along the East and Gulf coasts – led the ILA president to bleakly state: “It looks like we’re going to have a strike.” The union has authorised a strike if a contract deal isn’t reached by the end of September, when the existing contract expires.

Increased automation is once again on the table as the cause of job losses. ILA workers who help load and unload containers reportedly earn, on average, $124,000 a year in wages and benefits.

It’s a decade since longshoremen strikes on the US West Coast crippled trade, and US East Coast ports happily benefitted from the diverted traffic. The latest strike could see the tables turned, which would be disastrous for East Coast ports at a time when cargo volumes are already hard to maintain.

Talk is that President Obama may even step in if he sees the strike as a risk to the national economy. However, the actual threat of a strike can be extremely effective is sending cargo scuttling from a port hub and any presidential order may be too little, too late to stop some East Coast callers from making alternative arrangements. In some cases, the threat of strikes could be a convenient excuse to shift alliances from one port to the next.

To stop lines from straying, ports must actively downplay the threat of a strike, especially as there is still four weeks of negotiations to go. The more positive spin that can be put out to counter the union’s rhetoric, the more chance there is of keeping a firm hold on hard fought calls to capitalise on the festive run.