The International Longshoremen’s Association (ILA), a union representing tens of thousands of port workers along the East and Gulf Coasts of the United States, suspended negotiations on a new contract for its members on Monday, June 10, amid outcry over what it says is job-killing automation at the docks.

The ILA didn’t announce any immediate work slowdowns or stoppages that could negatively affect importers, such as suppliers in the promotional products industry who move goods through East and Gulf Coast ports from overseas factories.

The Port of Mobile, Alabama and the Mobile River. The ILA alleges an automation system barred by the current union contract was in use at this port.

Still, the suspension of talks came only about three-and-a-half months before the current ILA contract expires. The union has threatened to strike if a new contract isn’t inked before the expiration.

A strike could have serious consequences for the entire supply chain, especially if a work stoppage dragged on. One repercussion could be long delays getting imported product landed stateside and stocked, which can trigger inventory shortfalls for promo suppliers and other importers – and thereby spur inflation in B2B and B2C verticals.

While characterizing the contract talk breakoffs as a concern, suppliers ASI Media reached out to for quick reaction felt it wasn’t time to panic, with some saying this appears to be hardline tactics by the union – all part of seeking leverage in the high-stakes talks. “In an election year, I think the federal government will do everything possible to prevent a strike at the ports,” opined one supplier executive.

Supply chain challenges eerily reminiscent of the #COVID-era crisis are back, though not as severe as during the pandemic. How will that impact #promoproducts pricing and inventory? What's causing the problems? Some insights:https://t.co/nrIoxpTI1J

— Chris Ruvo (@ChrisR_ASI) May 30, 2024

A potential positive: While ILA suspended master contract talk negotiations, it indicated that talks on local chapter agreements are ongoing. ILA says it has about 85,000 members total.

The largest longshoreman union in North America, the ILA officially began contract discussions with the United States Maritime Alliance (USMX), which represents terminal operators and ocean carriers, back in February. ILA canceled talks scheduled for June 11 after discovering that APM terminals and its parent company Maersk Line, the second largest shipping company on the planet, were allegedly using an Auto Gate system at the Port of Mobile in Alabama.

The system, which allegedly processes trucks without input from union labor, is a violation of the current master contract between ILA and USMX, the union asserted. Leaders of the workers said they will not resume talks until the situation is “resolved,” noting that the Auto Gate system may be in use at other ports as well.

“There’s no point trying to negotiate a new agreement with USMX when one of its major companies continues to violate our current agreement with the sole aim of eliminating ILA jobs through automation,” said ILA President Harold J. Daggett, who serves as chief negotiator for the union.

This is all part of an increasingly challenging sourcing situation with which #promoproducts companies and other importers are contending.

Tariff Exemptions To End as Supply Chain Challenges Rear, Levy Increases Loom https://t.co/gYVcou9Rdk

— Chris Ruvo (@ChrisR_ASI) June 5, 2024

A spokesperson for Maersk said the company has not violated the contract. “We are disappointed that the ILA has chosen to make selected details of ongoing negotiations public in an effort to create additional leverage for their other demands,” the Maersk spokesperson told CNBC. “We will continue to engage with all stakeholders, including the ILA, to address their concerns.”

The potential for large-scale labor strikes have been a persistent threat to the supply chains of promo and other industries in recent years. While disruption occurred, a new contract for West Coast port workers was ultimately reached in 2023 without a major strike. The federal government helped broker – and then imposed – a new contract on unionized rail workers at the end of 2022 to prevent what some analysts said would have been an economy-crippling work stoppage.

The current specter of a strike looming from the East Coast/Gulf Coast port worker negotiations comes as promo and other industries are dealing with renewed supply chain challenges, including expiring import tariff exemptions, rising importing/shipping costs, and cargo container shortages.

The Maritime Executive reported last month that trade groups like the National Retail Federation have become increasingly concerned about the unresolved contract for East Coast/Gulf Coast port workers. "As early as March of this year, the American Apparel & Footwear Association flagged the talks, calling for the Biden administration to monitor progress and shepherd it to a satisfactory conclusion," the media outlet reported. "Analysts however have noted that the expiration comes just weeks before the U.S. presidential election, speculating that the union would not want to unduly influence the outcome with a strike."