*

Shippers fear another strike amid union's hard line

against

automation

*

October's 3-day strike ended in tentative deal, avoiding

key

issue of automation

*

Union says to return to negotiations in Nov ahead of Jan

15

deadline

*

Some shippers say 60-70% risk of strike, some plan

diverting

goods to West Coast ports

*

Post-strike congestion remains at key ports of Savannah

and

Houston

By Lisa Baertlein, Doyinsola Oladipo and Jessica DiNapoli

Oct 30 (Reuters) - U.S. shippers are steering clear of

East and Gulf Coast ports amid worries the 45,000 dockworkers at

those trade hubs will go on strike again if their union leader

does not land a new contract with employers by a Jan. 15

deadline.

The International Longshoremen's Association (ILA) labor

union and the United States Maritime Alliance (USMX) employer

group had ended a three-day strike in October with a tentative

agreement on wages, but left the thorny issue of port automation

still to be resolved.

"Anything we expect that we need in the back half of

January, we're effectively diverting to the West Coast," said

Chris Peterson, CEO of Graco ( GGG ) high chair and Crock-Pot cooker

maker Newell Brands ( NWL ), referring to the period after the

new contract negotiating deadline.

Peterson said the company switched a "couple of hundred

containers" of critical materials to the opposite coast to get

ahead of what he expects will be a second strike lasting, at

most, two weeks.

The Oct. 3 deal between the ILA and USMX gave workers a wage

hike of around 62% over six years and restarted work at 36

affected ports that handle about one-half of U.S. ocean trade.

Remaining contract issues include automation, a key sticking

point in negotiations as unions see it as a job-killer while

companies view it as a path to better profit.

ILA union leader Harold Daggett wants employers to ditch

automation projects that could threaten jobs, even though U.S.

ports risk falling behind key global rivals that are embracing

technology.

While the union on Friday said it planned to return to the

bargaining table next month, many shippers are skeptical that an

agreement can be reached without again stopping work at key

ports like New York and New Jersey, Houston and Savannah.

"I'm concerned that we could be right back where we were

just a few weeks ago," said Mike Steenhoek, executive director

of the Soy Transportation Coalition.

Salvatore Stile, founder of New York-based freight forwarder

Alba Wheels Up International, put the risk of a second strike at

60-70% and said his clients also are avoiding East Coast ports.

"The main issue has always been automation, not the money. I

think it's going to go hard core," Stile said of union

bargaining.

Atlanta-based Newell is again rerouting goods after

arranging for hundreds of containers filled with items

manufactured in Asia to arrive at West Coast ports instead of

East Coast facilities in October.

Volumes at the dominant West Coast ports in Los Angeles and

Long Beach touched new record highs this summer, when shippers

like club store operator Costco and jeans seller Levi

Strauss swapped coasts or moved extra goods prior to

the original contract deadline on Sept. 30.

"I've not heard anybody saying that they're going to

have a quick shift back in allocations to the East and Gulf

Coast based on the tentative agreement," said Port of Los

Angeles Executive

Director Gene Seroka, who added that October is shaping up

to be another strong month.

Meanwhile, some strike-affected ports are still working to

clear cargo ships that got stuck when work stopped.

Three weeks out from the end of the October strike, the

total number of waiting container ships is 31 compared with 54

on the day after the strike ended, according to Mirko Woitzik,

global director of intelligence for Everstream Analytics.

"Savannah and Houston are still pretty congested

following the strike," Woitzik said.

Retailers likely saved Christmas by rushing in goods early,

said Matthew Shay, CEO of the National Retail Federation, which

counts Walmart ( WMT ) and Target ( TGT ) - the biggest users of

container shipping - among its members.

Still, the knock-on effects of the strike hurt communities

across the country, Shay said. "We certainly don't want to see

that continue into the next year."