The largest U.S. ports union halts negotiations, increasing the possibility of a strike on the East and Gulf coasts.

• The union and management for East Coast and Gulf Coast ports have failed to reach a critical agreement due to claims by the International Longshoremen's Association that Maersk is replacing workers with automation.
• Unlike the West Coast ports, East Coast ports have a history of resolving labor issues and hammering out new contracts before a port work shutdown, with the last strike occurring in 1977.
• Since the pandemic and high inflation, labor battles in the U.S. and worldwide have intensified, and with automation becoming a more pressing concern, a potential strike may occur in the fall.

The International Longshoremen's Association has suspended talks with the United States Maritime Alliance this week as part of ongoing negotiations over a new labor contract.

The ILA announced that it had canceled negotiations with port management over a new labor deal after discovering that APM Terminals and Maersk, the world's second-largest shipping company and APM Terminals' parent company, were using automated technology to process trucks at port terminals without union labor. The union claims that an "auto gate" system was initially identified at the Port of Mobile, Alabama, but believes the technology is being used at other ports as well.

"Once again, USMX members are unilaterally circumventing our coast-wide Master Contract, which is a clear violation of our agreement with USMX. We will not tolerate this any longer," the union stated in its release. "Negotiating a new agreement with USMX is pointless when one of its major companies continues to violate our current agreement with the sole aim of eliminating ILA jobs through automation," ILA president Harold J. Daggett stated.

An emailed statement from a Maersk spokesperson confirmed that APM Terminals is adhering to the ILA/USMX Master Contract.

The Maersk spokesman stated that they are disappointed with the ILA's decision to disclose certain details of ongoing negotiations in order to gain more leverage for their other demands. However, they will continue to engage with all stakeholders, including the ILA, to address their concerns.

The USMX could not be immediately reached for comment.

The ILA, the largest longshoreman union in North America with 85,000 members, has set May 17 as the initial cutoff date for local contracts to be agreed upon in order to negotiate an overall master contract with the United States Maritime Alliance, which represents terminal operators and ocean carriers. However, the ILA has stopped talking amid ongoing negotiations of local agreements under the coast-wide Master Contract.

In July, Daggett, the union's chief negotiator, had stated that he wanted a favorable economic agreement for his members, which included opposition to port automation and exclusive port contracts for its members. During a speech to union members that month, Daggett pledged that the ILA would not be passive and would not allow anyone to take the lead. "It's time for foreign companies like Maersk and MSC to recognize that they need us as much as we need them," he said.

The ILA stated in its statement that it will not meet with USMX until the "auto gate" issue is resolved.

Although recent agreements have been reached between the union and the ports, logistics companies and shippers are still concerned about the possibility of a strike, resulting in an increase in cargo orders being shipped from West Coast ports during peak shipping season.

The ongoing Red Sea hostilities, drought conditions at the Panama Canal, and a recent sharp spike in container rates are causing issues in global trade that are impacting key shipping lanes. These challenges are particularly acute during the critical time of year for consumer goods coming to the U.S., and the delays associated with longer transits, container shortages, and weather add to the logistical challenges ahead of back-to-school and holiday season.

The American Apparel and Footwear Association's senior v.p. of policy, Nate Herman, stated that brands are cautiously optimistic about the upcoming holiday season but are taking precautions by bringing their products in earlier and balancing their shipping between the East and West Coasts due to ongoing crises and concerns about future crises.

The ILWU contract negotiations between 2022 and 2023 resulted in a stall in freight processing after intentional labor slowdowns and walk-offs. At the ILWU Canadian West Coast Ports, a 13-day strike caused over $12 billion in trade to be stuck at sea, leading to a backlog of containers that took months to clear out. This resulted in a reverse trade flow situation, with more cargo volume being sent to ports including New York/New Jersey and Virginia to avoid the labor strife.

The ILA contract currently has longshoremen earning between $20-$37 per hour, according to previous CNBC reporting. However, the union is aiming for a salary increase larger than the 32% negotiated by the ILWU in its new six-year contract. The ILA is also seeking a generous bonus package. In July, the Great Lakes District of the union secured a 40% increase in wages and benefits for its new six-year contract. No definitive salary increase target has been made by the ILA.

Negotiations for the six-year contract officially began in February.

In late September 2018, the ports and ILA signed a six-year contract that Daggett considered the greatest in the union's history.