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Kicking the Can Down the Dock: Today’s Precarious Labor Peace Could Become a Major Industry Problem

Recent and continued labor problems are occurring around the globe and in virtually every sector of the logistics industry.

Disagreements have clearly demonstrated that workers and employers have starkly different priorities. While most of the recent disputes have been settled, the industry is sitting on a powder-keg of pent-up labor angst that will keep the industry on edge for the next five-to-six years.

Fresh on everyone’s mind, actions between ILWU Canada and the BCMEA foreshadow what will happen to the industry if workers and employers do not get on the same page. Slowdowns and multi-week strikes (some legal and some not) that paralyze not just the ports but also down-stream industries such as rail, trucking, and warehousing, will become the norm. Additionally, as we nearly saw with the UPS and Teamster row, a major labor dispute even in one sector of the logistics industry has the capability to cripple any economy.

“The recent agreements are basically a mini détente until both sides can figure out the best way to navigate the post-pandemic landscape,” said Peter Hsieh, Vice President of Sales and Marketing for OEC Group’s Northeast Region. “Both sides need to understand that their actions affect everyone in the industry and beyond. They need to be willing to listen to each other and work together to ensure that we do not have a potential economic disaster five years from now.”

One negotiation to keep an eye on is between the International Longshoreman’s Association (ILA), which represents the U.S. East and Gulf Coast ports, and U.S. Maritime Alliance (USMX). The union’s chief, Harold Daggett, has already stated that the union is determined to secure significant wage increases, and he has warned that the union will take a hard line against automation. Worse, he is also encouraging his counterparts around the world to take the same stand against automation.

“While there is considerable time for both sides to reach a deal, this negotiation could quickly go south and result in some form of labor action that will disrupt every East and Gulf Coast gateway – rolling back all the gains East and Gulf Coast ports got from the labor problems on the West Coast,” said Keith Sarnell, OEC Group’s Vice President of Sales and Head of the Kansas City branch. “This would most likely result in another mass cargo shift to West Coast ports, and that could also lead to severe backlogs and rate increases.”

The U.S. is not alone in dealing with labor issues in the logistics industry. Europe is also in danger of mass labor actions and strikes, specifically with airlines and railways. Right now, the current industry belief is that there will be some kind of walkout or slowdown with either air traffic controllers or workers on the ground in France, Belgium, and Italy, with the potential for labor angst to spread throughout the continent – causing mass disruptions.

“Anyone that has become complacent over the last few months because of a softer market is going to have a rude awakening when labor action occurs,” continued Mr. Hsieh. “This is something shippers need to start thinking about right now and begin planning their supply chains accordingly. The reality is these labor disputes are real and the impact can be severe. Working with an advisor and planning ahead is the only way to ensure you do not become an indirect casualty of these volatile situations.”

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