Posted on November 1, 2023
Georgia port officials say a labor dispute over who will operate cranes at the Leatherman Terminal in North Charleston could cost their state hundreds of millions of dollars if a legal decision isn’t overturned by the U.S. Supreme Court.
The Georgia Ports Authority said in a filing that a July ruling by the 4th Circuit Court of Appeals threatens its plans to build a 395-acre shipping terminal in Savannah because the ruling means it — like Leatherman — would have to use an all-union workforce.
The appeals court said in its ruling that a 2012 contract amendment between the International Longshoremen’s Association and the U.S. Maritime Alliance calls for organized labor to do all of the work at any new port terminal opening in states that have traditionally used a “hybrid” model, with state employees operating the cranes and union workers moving cargo through the terminal yards.
The $1 billion Leatherman was the first test of that contract between the ILA and the alliance, which is consortium of container lines that call on U.S. ports. While the ruling was specifically about the North Charleston site, it also affects hybrid-labor terminals in Georgia and North Carolina.
The S.C. State Ports Authority, which has used the hybrid model for nearly 50 years, has appealed the 4th Circuit ruling to the Supreme Court, which hasn’t decided whether it will hear the case.
Barbara Melvin, president and CEO of SPA, said earlier this month that the maritime agency “still firmly” believes in its hybrid workforce model and that she thinks “we have made a great case” to the high court.
“I think the message I like to convey about this is the terminal is going to be utilized,” she said. “Charleston has always been generationally proud of our port activity, and this question will be answered. It’s at its final stage. The question will be answered, and that will be accepted by both sides in my opinion, regardless of the outcome. It’s Charleston. We’re going to make the best of it. It’s what we do here.”
The Georgia authority’s filing is among a half-dozen so-called friend-of-the-court briefs submitted to the Supreme Court in recent days by groups supporting South Carolina’s effort to overturn the 4th Circuit ruling. The filings mirror arguments that many of the groups made when the case was before the appeals court.
Those groups — including chambers of commerce, manufacturing associations, right-to-work advocates and politicians including presidential candidate and U.S. Sen. Tim Scott — say the 4th Circuit ruling lets the ILA create an illegal third-party boycott of the Leatherman Terminal. They add that the ruling also lets the union take new jobs it wouldn’t otherwise have a legal right to rather than preserve work its members already do.
The National Labor Relations Board made the initial decision, which was then upheld by the 2-1 4th Circuit ruling, to give ILA members the right to Leatherman’s crane jobs. The panel has until Nov. 29 to provide the Supreme Court with a response in support of its findings.
The ILA has not yet filed a brief in the case. A union spokesman did not respond to a request for comment.
The SPA has said an all-union workforce at Leatherman would raise costs and potentially drive customers to other ports.
Georgia officials said abiding by the 4th Circuit ruling would cost their maritime authority nearly $600 million a year in extra costs — including higher wages and legal risks — and lost revenue at its planned Hutchinson Island terminal on the Savannah River. The $2 billion project, which would be able to handle up to 2 million 20-foot containers annually, is expected to open by 2030.
“If the Fourth Circuit’s decision stands, the same union is certain to induce similar boycotts when the authority opens its newest Savannah terminal,” the Georgia Ports Authority said in its court filing. “If successful — and allowed by federal courts — such secondary boycotts would not only upend a model that has served the authority and Georgia (along with South Carolina) for decades, it could greatly reduce the authority’s shipping and cargo capacity and substantially limit imports and exports throughout the Southeast.”
It’s the first time Georgia has weighed in on the Leatherman dispute.
“The Fourth Circuit’s decision would devastate the authority’s ability to operate new terminals under the appropriate labor model of its choosing and threaten Georgia’s investment in the Port of Savannah,” it said in its brief. “Given the new terminal’s scale and cost, it is critical that the court decide this case, lest the authority’s new port stand idle like South Carolina’s Leatherman Terminal.”
Leatherman’s first phase opened in March 2021 and is designed to handle 700,000 20-foot containers a year. It has operated at less than one-fifth of its capacity because most shipping lines refuse to use it until the labor dispute is settled.
The National Right to Work Foundation said in its filing that the 4th Circuit ruling will likely lead to job losses for the 270 SPA crane operators. The S.C. Chamber of Commerce, in a brief filed with the U.S. Chamber of Commerce and the National Association of Manufacturers, said the lower court decision would “inflict lasting harm” on the East Coast’s economy and the nation’s supply chain.
“Permitting unions to threaten and thwart decades of state investment strategies will chill infrastructure maintenance and enhancement, stifle economic development, and disincentivize supply-chain improvements,” Gov. Henry McMaster and Georgia Gov. Brian Kemp said in a separate brief filed in support of the SPA.
