Backgrounder: Container RoyaltiesAugust 28, 2012
The first container royalties were established in 1960 as a way to protect members of the International Longshoremen’s Association, AFL-CIO (ILA) in New York from job losses created by containerization and its introduction of automated cargo. In the more than half a century since, container royalty payments to ILA workers, not only in New York but at all the East and Gulf Coast ports, have increased dramatically, reaching over $211 million in 2011 alone. Not all of that money ends up in the pockets of ILA members; their union gets 10 percent – $21 million last year – through a checkoff from each member’s royalty payment.
The initial reason for implementing container royalties – to protect ILA members from the loss of work – has long been forgotten. Today, thousands of workers who were not even born in 1960 – or in 1968 when container royalties were first distributed – continue to receive payments that in 2011 averaged $15,500 for ILA workers at the 14 East and Gulf Coast ports.
Unlike the Port of New York and New Jersey, then and now the predominant port on the East Coast, ILA workers at ports like Savannah and Charleston saw their job opportunities grow because of containerization. The container royalties they receive have been a bonus that has nothing to do with any adverse job impact caused by containerization.
The dramatic increase in royalty payments resulted from a combination of two factors – the reduction in the number of ILA workers and an increase in the tons of container cargo – from about 50 million tons in 1996 to 110 million in 2011.
With fewer workers and more tons, royalty payments, which are based on the weight of containerized cargo, have increased over the years. In the 14 years ending Sept. 30, 2011, the payments totaled $1.8 billion. In Savannah alone, they increased from $6,028 in 1996 to nearly $36,000 per worker in 2011.
In reality, container royalties have morphed from an assessment imposed through arbitration in 1960 to what they are today – another form of compensation for ILA workers, who are among the nation’s most highly compensated. The vast majority of ILA workers were not alive when containerization was introduced in New York in the late 1950s. In fact, only 136 of the 3,281 ILA workers at the Port of New York and New Jersey today were working at the port in 1968, the year container royalties were first distributed.
In the current negotiations over a new Master Contract, management is not asking to eliminate container royalties, only to cap the payments and use the excess, not as savings for employers but to help pay for other benefits for ILA workers.