UPDATE 4-Deal reached to avert U.S. port strike for now

Ernest Scheyder
Reuters Middle East

* Tentative deal on container royalty payments

* Full contract expected within 30 days

(Recasts; adds details throughout)

Dec 28 (Reuters) - The union representing nearly 15,000

dockworkers at U.S. Atlantic and Gulf Coast seaports stretching

from Boston to Corpus Christi, Texas, reached a tentative

contract deal with shipping companies on Friday, averting a

strike that threatened to wreak havoc on the U.S. economy.

The International Longshoremen's Association (ILA) and the

U.S. Maritime Alliance clinched a deal in federally-mediated

talks less than two days before a strike deadline set by the

union to coincide with expiration of the contract on Sunday.

The threatened walkout would have brought container cargo

operations to a halt at 15 ports along the Eastern seaboard and

Gulf Coast, marking the first such work stoppage in 35 years.

Friday's announcement came hours after the White House urged the

parties to settle their dispute.

Under Friday's deal, the two sides agreed to extend the

terms of their expiring labor pact for 30 more days while

negotiators finalize details of their settlement, the Federal

Mediation and Conciliation Service said in a statement.

The breakthrough came as the parties agreed "in principle"

on the contentious issue of "container royalties," or bonus

payments earned by ILA dockworkers based on the tonnage of cargo

moved through their respective ports.

The new contract does not eliminate the royalty payments, as

the shippers had demanded, according to Benny Holland, an

executive vice president for the ILA.

"The royalty will stay intact. We have worked out a formula

for it," he said in an interview. He did not elaborate and the

shippers declined to comment. No further details were disclosed

in the government's statement.


Established in 1960, the royalty payments to ILA workers are

based on the tons of container cargo that move through a port.

That tonnage has risen from 50 million tons in 1996 to 110

million tons last year, according to the alliance.

Total payments last year were $211 million, according to the

USMX, or an average of $15,500 per worker.

The original idea of the royalty payments was to protect

longshoremen from wage losses expected as a result of

"containerization," in which more and more goods are packed in

the now-familiar 20- and 40-foot long boxes. Those take less

manpower to offload than the less-standardized containers they


The two sides also fought over the guaranteed eight-hour

workday in the current contract as well as the seven-man

"lashing gang." Lashing crews, or gangs, secure the cargo

containers to the vessel using metal lashing rods to keep them

from moving while the vessel is at sea. The maritime alliance

wanted to eliminate each.

A new long-term agreement has an 80 percent chance of

happening by Jan. 28, Capital Alpha Partners analyst Loren Smith

said in a research note.

The temporary agreement comes as labor forces felt

emboldened by recent victories by other unions across the United

States. At the same time, shipping companies and port operators

have been using more automation, but have seen profits shrink.

The Baltic Dry index, which tracks the cost to ship

materials overseas, is down 55 percent in the past year and

currently trading at levels it has not seen in a decade.

(Additional reporting by Kevin Gray in Miami and Steve Gorman

in Los Angeles, editing by Mary Milliken; desking by G Crosse)

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