The container carriers and port operators, represented by the U.S. Marine Alliance, want to cap the royalties at 2011 levels, saying they've morphed into a huge expense, totally unrelated to their original purpose, which hurts the industry's competitiveness as it tries to keep up with new technology. The alliance says the royalty payments now amount to a bonus averaging $15,500 annually for East Coast workers who already earn more than $50 per hour.
The union says the payments aren't a bonus, they're an important supplemental wage. It argues that in its previous contract, management agreed to remove the royalties cap in exchange for being allowed to use $42 million of royalty payments to cover a previously negotiated wage increase. There's no way the union can allow the alliance to revive the cap now and accept the cuts in worker income and union revenue, McNamara said.
The sides have traded charges of inflexibility, though both also point to a history of cooperation since the last East Coast-wide strike in 1977. No one has ruled out renewing talks.
But with time so short, companies are pushing up shipment dates or finding alternative transportation, said Steve Lamar, executive vice president of the Washington-based American Apparel and Footwear Association.
Companies are already worried about restocking after the holidays, and some are still dealing with the effects of the West Coast shutdown and Superstorm Sandy, he said.
"You've already got companies and ports and trade that have been battered by a couple of situations over the last couple of months, and we still have this uncertainty," Lamar said.
In Philadelphia, port executive Robert Blackburn estimates a strike could affect 60 percent of the tonnage the port handles.
"Frankly, there's not a lot we can do except that hope that cooler heads prevail and, if they don't, perhaps there will be intervention by the president," Blackburn said.
Associated Press writers Eileen AJ Connelly in New York and Kathy Matheson in Philadelphia contributed to this report.