On October 1st, 2024, the contract between the ILA and USMX expired, leading to a three-day strike. To prevent significant disruptions to the supply chain during the critical holiday peak season, both parties agreed to extend the contract until January 15th, while continuing heated negotiations over key issues like wages, benefits, and port automation. Just when it seemed that another strike was inevitable, the ILA and USMX reached a new agreement on January 8th. As of February 25th, the agreement was officially ratified, with 99% of ILA members voting in favor of the new terms. The contract will be formally signed in March, backdated to October 1st, 2024, and will run through September 30th, 2030.
Key changes in the new contract
The agreement brings significant changes that impact wages, benefits, and the integration of technology at U.S. ports. Here’s a breakdown of the most notable updates:
- Wage Increases: The new contract includes a substantial 62% wage increase for port workers over the six-year term. The base hourly rate will rise from $39 to $63, providing significant financial gains for workers. Additionally, the higher wages are designed to attract new talent to the workforce and help address the ongoing labor shortages at U.S. ports. The maritime industry has faced significant worker shortages due to an aging workforce, with many experienced workers nearing retirement, as well as a competitive job market where the physical demands of port work often deter younger workers. With this wage increase, the contract aims to make port jobs more attractive, securing a more stable and experienced labor force to meet the growing demands of the global supply chain.
- Accelerated Wage Growth for New Workers: The agreement accelerates wage increases for new workers, allowing them to reach higher pay levels faster compared to previous contracts. This will help attract new talent to the workforce, addressing some of the challenges posed by an aging workforce.
- Strengthened Benefits: The contract significantly enhances workers’ healthcare plans, ensuring better coverage and reducing out-of-pocket expenses. Additionally, employer contributions to retirement plans will be increased, providing workers with a stronger financial safety net.
- Automation with Workforce Provisions: Automation was a key point of contention during negotiations. The new contract allows for the introduction of certain modern technologies, such as semi-automated cranes and the integration of AI, aimed at improving port efficiency. However, for every new technology implemented, the agreement requires the hiring of additional workers, ensuring mitigation of job losses due to automation. While the contract prohibits fully automated cranes, implementing these tools and partial automations will make operations more efficient without compromising employment opportunities.
- Cost and Duration: The contract, which is effective from October 1, 2024, to September 30, 2030, will cost employers approximately $35 billion over its six-year duration. This cost reflects the wage increases, benefit enhancements, and the integration of technology while maintaining a stable labor force.
What this means for global supply chains
With this contract ratified, businesses can now expect labor stability at U.S. East and Gulf Coast ports through 2030. These ports handle a significant share of U.S. imports and exports, particularly for industries such as energy, agriculture, pharmaceuticals, and consumer goods.
The agreement ensures:
- No immediate labor disruptions, reducing supply chain uncertainty.
- A competitive and stable workforce, balancing efficiency with job preservation.
- Potential improvements in port efficiency, as semi-automated cranes and AI-driven solutions are introduced under the contract’s provisions.
Final thoughts
The ratification of the ILA-USMX agreement represents a significant milestone for labor stability and modernization in the U.S. port system. With nearly 99% of ILA members voting in favor, the contract provides wage growth, enhanced benefits, and strategic automation protections that will support both workers and port operations.
For supply chain leaders, this means greater predictability and efficiency in cargo movement, helping businesses maintain smooth operations in an increasingly complex global trade environment.
