NetBonds Blog

February 23, 2015

Tentative agreement between the ILWU & PMA reach Friday night
Filed under: Uncategorized @ 9:42 am

The tentative coastwide contract agreement that was reached Friday evening by the International Longshore and Warehouse Union and the Pacific Maritime Association, while most welcome, is just the beginning of a long process West Coast ports must endure to recover from the backlog of containers and vessels that have overwhelmed their operations the past four months, and to restore trust among shippers.

Industry experts agree that it will take months for Los Angeles, Long Beach, Oakland, Seattle and Tacoma — all among the 10 largest ports in the U.S. — to return to “normal” operations.

Even then, the old normal will not be good enough to accommodate the cargo surges that occur each week as vessels with capacities of as many as 14,000 20-foot containers descend upon West Coast ports. In fact, the brutal irony of the ILWU work slowdowns, and the PMA’s response of restricting night and weekend work, is that these actions compounded problems that were already occurring anyway because of the arrival of big ships operated by expanded carrier alliances.

The Port of Oakland stated Friday in a press release that it will take Oakland and other West Coast ports six to eight weeks to recover from the cargo backlog. Some industry analysts might say that is an ambitious schedule, given the magnitude of the cargo and vessel backlog at West Coast ports. Some say three months is a more realistic goal.

Furthermore, the tentative contract must now be ratified by the memberships of the ILWU and the PMA, a process that can take several weeks. In past contracts that were marked by work slowdowns, the ILWU did not immediately return to historical productivity levels. This time, the ILWU and PMA reportedly committed to return to full productivity and manning levels immediately. The coming week should determine if both sides are serious about their commitments.

The ILWU and the PMA were not immediately available to answer these and other questions. Will the union in Seattle, Tacoma and Oakland return to historical crane productivity of 26-28 container moves per crane, per hour that was cut in half by work slowdowns beginning in October that the ILWU adamantly denied it orchestrated? Will employers immediately spend the extra money needed to hire full work crews for night shifts and weekends, even though premium pay is required for all work outside of the normal 8 a.m. to 5 p.m., Monday-through-Friday shifts?

West Coast ports may actually get a breather soon because the vessels that left Asia this week before Chinese New Year celebrations began will hit U.S. shores in early March. The ports will then have about three weeks of significantly-reduced cargo volumes while factories in Asia are closed for the celebrations, and this could give them a running start at working off the container backlogs that have accumulated in recent months.

West Coast ports will then have to face a harsh reality: importers and exporters, disgusted by months of fruitless contract negotiations, port congestion and public bickering between the ILWU and PMA, will say enough is enough. Retailers and direct shippers in surveys have indicated they will most likely shift some of their cargo volume to East Coast ports. Southeast ports like Charleston and Savannah, which typically experience little to no longshore labor disruption, saw significant increases in volumes in the second half of 2014 due to diversions. Two-thirds of the U.S. population lives east of the Mississippi River. Many of the large retailers that dominate U.S. containerized imports are based there and have extensive retail store networkers in the eastern half of the country. A permanent loss of some cargo for the West Coast is inevitable. That is exactly what happened after the contentious 2002 contract negotiations.

Cargo interests hope that the five-year contract does not simply maintain the current dysfunctional labor relations process on the West Coast until the next contract is negotiated. Enlightened shippers, carriers and labor leaders will want to use the next few years of labor peace to rework the contract negotiation process, for sure, but also to completely revise the long-standing arbitration process that allows the ILWU to hard-time employers over health and safety claims that oftentimes have no health or safety implications whatsoever.

The PMA highlighted this fact during the heat of the negotiations when it noted that the ILWU lost more than 80 percent of the  claims that were arbitrated during the life of the previous six-year contract.

February 12, 2015

PMA to shut down West Coast Ports Feb 17-20th
Filed under: Uncategorized @ 9:40 am

The port is congested and vessels are stranded, enjoy the pics

 

 

January 27, 2015

Negotiators for the Pacific Maritime Association and the International Longshore and Warehouse Union have reached a tentative agreement on the chassis maintenance
Filed under: Uncategorized @ 9:46 am

Negotiators for the Pacific Maritime Association and the International Longshore and Warehouse Union have reached a tentative agreement on the chassis maintenance and repair issue that has been the major roadblock to reaching a new waterfront contract at West Coast ports.

PMA spokesman Steve Getzug said on Monday that the tentative agreement was reached, but that no further details will be released at this time. Getzug also said the ILWU work slowdowns that have crippled all West Coast ports since early November are continuing.

ILWU spokesman Craig Merrilees said negotiations continued through the weekend and into Monday, and he described the tone of the negotiations as “positive.”

Indeed, industry sources said the ILWU and PMA are now negotiating with an intensity not yet seen since the talks began on May 12, 2014, and both parties appear to want this saga of mutual recrimination and horrendous delays to end as soon as possible.

The three major remaining issues in the negotiations appear to be wages, pensions and the length of the new contract. In past contract negotiations, wages and pensions were held to the end of the talks and were normally resolved quickly. However, if the new contract extends longer than three years, that will be a surprise to many.

When the talks began last spring, the most important issue mentioned publicly was the Cadillac tax in the Affordable Health Care Act, also known as Obamacare, that is set to take effect on Jan. 1, 2018. The provision will levy a tax on high-end medical plans, with the revenue to be used to subsidize workers who do not have access to affordable health-care plans. Under the ILWU plan, employers pay 100 percent of the premiums, and longshoremen pay $1 co-pay for medicine, qualifying it as a Cadillac plan.

The PMA and ILWU in late August announced that negotiators had reached a tentative agreement on health care, leading most observers to conclude the new contract would run for three years, from July 1, 2014, until June 30, 2017, and the Cadillac tax issue would therefore be left for future negotiations.

However, employers are known to want as long a period of certainty on the waterfront as possible, and the last two contracts have run for six years, a practice begun after the 10-day employer lockout in 2002. Therefore, if the term of the contract must still be negotiated, it is possible that some type of financial agreement on the cost of medical care has been reached. PMA President Jim McKenna said last March at the TPM Conference in Long Beach that the Cadillac tax is estimated to add $150 million a year to the cost of medical insurance for longshoremen.

Although details of the chassis agreement have not been released, it is believed that the ILWU mechanics will have the jurisdiction to inspect every chassis before it leaves the terminal. This has not been an issue in the past because shipping lines owned almost all of the chassis, and the carriers are members of the PMA. However, the carriers in recent years sold their chassis to equipment-leasing companies. Those companies are not members of the PMA, and they have no contractual relationship with the ILWU.

Hundreds of longshoremen are mechanics, and their jobs would be threatened if the ILWU lost jurisdiction over chassis M&R. However, inspecting each chassis gives longshoremen significant leverage over employers. The ILWU last fall, for example, increased the intensity of its inspections, at times instructing truck drivers to exit their cabs while the inspection took place. This added costly time to the truckers’ visits to the terminals and contributed to congestion at the facilities.

Furthermore, because the chassis-leasing companies now own the assets, and are the financially responsible party if an accident occurs and injury or death results, the leasing companies must take M&R responsibilities seriously, which raises the question of why an additional inspection for roadability is needed at the marine terminals. Also, leasing companies do not want their equipment to be “red-tagged” as inoperable because of defects, if the ILWU chooses to do so frivolously to exert leverage over employers. During the negotiations, some truckers reported to their dispatchers that they were having trouble finding roadworthy equipment because the  ILWU in Los Angeles-Long Beach would randomly hold a “red-tag party” at various terminals.

On the East Coast, the International Longshoremen’s Association has the right to inspect all chassis before they leave the marine terminals.

January 23, 2015

Congestion at West Coast ports is the worst
Filed under: Uncategorized @ 11:43 am

Congestion at West Coast ports is the worst it has been since longshoremen began hard-timing employers in early November, and conditions are expected to worsen as terminal operators and the International Longshore and Warehouse Union use manning issues to see how much pain they can inflict on each other.

The strategies being deployed by the Pacific Maritime Association and the union are expected to continue even though both parties have agreed to negotiate their coastwide contract under the auspices of the Federal Mediation and Conciliation Service. Employers and the union are intensifying their efforts to punish each other despite the involvement of the federal mediator in the negotiations.

Terminal operators, which are incurring huge expenses because of plunging productivity, have been attempting to cut back on labor costs wherever possible. For example, terminal operators stopped night gate operations in Seattle and Tacoma several weeks ago, and in Oakland during the past two weeks.

Most of the 13 container terminals in Los Angeles-Long Beach continue to operate night gates, but they recently stopped ordering longshoremen to work on vessels during the night shift. With mountains of containers building on the docks, employers said it had become counterproductive to unload more containers at night and add to the congestion. Therefore, the terminals in Southern California have maintained yard and gate operations at night in an attempt to make room for containers that would be discharged from ships the next morning when vessel operations resumed.

These actions, while based upon basic operating procedures, have a residual impact as well on work opportunities for longshoremen. Dockworkers in Seattle, Tacoma and Oakland have lost all of their night work, and crane operators in Southern California have lost their vessel work at night. When longshoremen don’t work, they don’t get paid.

The PMA said none of this would be necessary if ILWU crane operators in the Pacific Northwest ports would return to their normal productivity of about 28 container moves per crane per hour. Those numbers plunged below 20 moves per hour in late October when the ILWU began to implement work slowdowns to pressure employers in the coastwide contract negotiations, the PMA has said numerous times since then.

In Southern California, the ILWU’s strategy has been to short employers the skilled yard crane operators that are crucial to keep containers moving through the yards and out of the gates. The PMA reported that in early November the ILWU locals informed employers that the number of yard crane operators the union would dispatch each day would decrease from 110 to 35. Horrendous delays and gridlock resulted immediately. (See chart on homepage of JOC.com.)

The ILWU disputes those numbers. “The shipping companies have 700 steady crane operators at their disposal, who are trained and certified, who do not report to the dispatch hall,” said Adan Ortega, spokesman for ILWU Local 13. “They are ILWU Local 13 members who are telling us that they are only reporting for work three to four days a week.”

Ortega said the manning decisions being made by employers, if reversed, would result in the dispatch of enough longshoremen “to staff a semi-full contingent of three gangs at night as well as the three gangs used during the day,” he said. Furthermore, crews being ordered by employers to work in the yards each day “are at 50 percent,” Ortega said.

Employers and longshoremen are paying a dear price as the manning war continues. The congestion and shorting of labor in Southern California have had the paradoxical result of increasing work opportunities for general longshoremen (those not trained to operate equipment), and subsequently boosting employer costs. According to numbers posted on the PMA website, for the four-week period ending Dec. 19, man-hours paid by employers to the ILWU were 20 percent higher than during the same period in 2013. Yet, the ports of Los Angeles and Long Beach reported that in December container volume in the port complex was down 1 percent from December 2013.

Even though general longshoremen are earning a good deal of money during this crisis as they pick up 20 percent more man-hours, skilled equipment operators are losing work opportunities if the union is purposely refusing to dispatch them, as the PMA has stated. This is playing into the PMA’s strategy, though, as employers would like to see longshoremen who are losing work opportunities to begin pressuring the ILWU negotiators in San Francisco to reach a contract agreement so everyone can go back to work.

The main issue that has been holding up the negotiations, at least for the past few weeks, is reportedly that the ILWU wants terminals to mandate that ILWU mechanics inspect each chassis before it leaves the terminals, and that employers give the ILWU mechanics jurisdiction over “red-lined” terminals where the International Association of Machinists does chassis maintenance and repair work. Also, the ILWU wants jurisdiction over off-dock sites operated by the chassis-leasing companies. Those companies are not members of the PMA. They have no contractual relationship with the ILWU and no obligation to hire ILWU mechanics to do M&R work on their chassis.

The ILWU mechanics account for about 10 percent of the registered longshoremen in Southern California, so the employers’ strategy is at least in part to stir up dissension in the ILWU by withholding work opportunities from the larger body of longshoremen who have no stake in the chassis issue.

While everyone is suffering during this standoff — longshoremen, terminal operators, shipping lines and the thousands of truckers who wait in long lines at congested marine terminals — cargo interests are also paying dearly. More than 100 shipper-related organizations in recent months have reported lost export opportunities, seasonal import merchandise being marked down in price because of late deliveries to the stores, huge charges for the late return of equipment and the significant costs involved in re-routing West Coast-bound shipments to ports on the East Coast and in Canada.

Meanwhile, terminal congestion is getting worse by the day. Gene Seroka, executive director of the Port of Los Angeles, told a West Coast conference of freight forwarders and customs brokers in San Diego in October that terminal operators were utilizing 90 percent of their available land because of the congestion. After 80 percent utilization, service is degraded because there is nowhere to store containers. This results in wasteful, multiple handling of containers. Last weekend, Seroka told the annual conference of the California Trucking Association in Monterey that marine terminal utilization is now running at 95 to 97 percent of the available land.

January 16, 2015

Ships back up at US West Coast ports after night vessel work ends
Filed under: Uncategorized @ 8:48 am

January 15, 2015

Footwear industry warns of ‘catastrophe’ if US West Coast ports shut down
Filed under: Uncategorized @ 1:43 pm

Top U.S. port gateways for footwear imports.

HONG KONG — A U.S. West Coast port lock out would be “a catastrophe beyond belief” for the footwear industry that imports the vast majority of its products through the terminals at Los Angeles-Long Beach, said Matt Priest, president of the Footwear Distributors and Retailers of America.

Priest is alarmed at the escalating tensions between the Pacific Maritime Association and International Longshore Warehouse Union, as concerns mount that the acrimonious negotiations are heading towards waterfront employers locking out the longshoremen.

“We have sent letters to the President, to the PMA, the ILWU, and one went out today to 200 organisations, imploring them to come to some kind of agreement because of the importance imports play in our economy,” he said.

“Both from a consumer point of view, and also an employment perspective it would be a catastrophe beyond belief. A huge disaster for us. My hope is that cooler heads will prevail and an agreement will be reached.”

The import numbers for footwear are incredible. From January through November, the latest figures available, 2.166 billion pairs of shoes were imported into the U.S., almost 95 percent of which were made in China. In the 11-month period, 866 million pairs of shoes entered the U.S. through the ports of Los Angeles-Long Beach. The port complex handles 68 percent of international footwear imports, according to PIERS data.

“This is a critical period for the U.S. footwear industry that is building up inventory for the Easter period when a lot of shoes are sold,” Priest said. “In July and August is another big shipping period to catch the back-to-school sales, and then there is the end-of-year holiday season.”

Priest said he was fortunate to tour the Port of Long Beach in October and saw first hand the ships backed up and the congested yards, so he had a good idea of what was coming and could inform members.

“The spring and early summer footwear is being imported now, but a lot of our members have been prepared for what is happening and started bringing in footwear early, putting it in warehouses, or air freighting things in if they needed to get to retail stores quicker.”

A lock out of longshoremen would force shippers to divert their cargo and try to enter the U.S. via alternative gateways, but Priest said the options were not ideal.

“The alternatives are to divert to other ports in Canada and truck cargo down to the U.S., or to ship via Houston or the East Coast. The East Coast ports are great and provide good services to the Eastern Seaboard, but do not nearly have the capacity of the Southern California ports,” he said.

Stephen Ng, OOCL director of trades, said he was not aware of any breakdown in talks between the PMA and the ILWU and the likelihood of a lock out, but he said if it happened, the alternatives were limited.

“As the situation is affecting the whole of the U.S. West Coast, carriers would have little option in switching or omitting port calls,” he said.

The senior Asia executive of one of the world’s top 10 carriers, who declined to be named, said if port operations on the West Coast came to a halt, demand via the East Coast would go up and customers would pay the price.

“There is simply not enough port and ship capacity to replace the U.S. West Coast flows. Capacity can’t just be made up,” he told JOC.com.

“Lines will also suffer as a large part of their ship and container fleet will be occupied with waiting, which will have a negative impact on the bottom line.”

Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowle

January 14, 2015

ILWU-PMA trade painful blows as talks reach eight-month mark
Filed under: Uncategorized @ 9:59 am

Longshore contract negotiations on the U.S. West Coast have degenerated into a war of attrition in which the union’s work slowdowns have significantly increased operating costs for shipping lines and terminal operators, and the employers are countering by reducing work opportunities for rank-and-file longshoremen.

Caught in the middle are the ports, whose reputations have been tarnished, truckers, who sit idle in long lines, often without compensation, and cargo interests, whose cost of shipping through the West Coast has skyrocketed.

Conditions are so bad that some employers say the only way to stop the bleeding is to lock out the union as they did in the 2002 contract negotiations. However, those employers are still outnumbered by others who say that everyone will lose in a lockout, and a war of attrition is the better option.

The contract negotiations, which began on May 12, are now in their ninth month. Shipping lines and terminal operators, who are represented by the Pacific Maritime Association, can no longer afford the increased operating costs that result from work slowdowns by the International Longshore and Warehouse Union. According to numbers published each week on the PMA website, terminal operators are paying 15 to 20 percent more man-hours than they did in the same weeks last year, but cargo volumes are up only about 1 to 3 percent, depending upon the port range.

Shipping lines are suffering as well because vessels are taking as long as one week to work, when cargo should be discharged and loaded in no more than three days. Carriers say they lose at least $50,000 each day that their vessels are idle. According to the Marine Exchange of Southern California, seven containerships were at anchor Tuesday awaiting berths. In Oakland, the port reported that eight container ships were at anchor.

The strategy of ILWU negotiators apparently is to make the hard-timing so costly for individual employers that they will cave in to the union’s demands on unresolved issues involving automation, and also jurisdiction over chassis maintenance and repair. The ILWU hopes the individual companies will pressure PMA negotiators to grant the union’s demands. Last month, ILWU President Bob McEllrath said the negotiations would reach a successful conclusion only when shipping lines became directly involved in the contract talks.

Employers have taken the offensive by cutting back on work opportunities for longshoremen. Terminal operators in Seattle and Tacoma have not opened for night shifts for several weeks now. Oakland’s terminals no longer work vessels at night, although they continue to employ longshoremen at night to organize containers in the yards. When longshoremen refuse to dispatch enough workers, especially equipment operators, to fill a gang, employers dismiss the gang within one hour so the workers don’t have to be paid.

Terminal operators in Los Angeles-Long Beach caused a stir on New Year’s Eve when they informed the ILWU locals in Southern California they were reducing the number of vessel work crews at night to one, from the three 45-member gangs that had been loading and unloading ships. Employers went a step further on Monday when they informed the ILWU locals that beginning today there would be no gangs hired to work vessels at night, although yard and gate operations would not be affected.

According to letters from the PMA to the ILWU locals, these actions make good operational sense. PMA stated that since the ILWU in Southern California on Nov. 3 unilaterally decided to reduce from 110 to 35 the number of skilled yard crane operators that would be dispatched each day, the container yards had become so congested there was no space left to accept additional containers at night. Therefore the terminals would stop discharging containers from the ships at night, and would use the night shift to relieve congestion in the yards.

PMA spokesman Steve Getzug said Tuesday that reasoning is still valid. “Our sole rationale for the adjustments in night operations at L.A. and Long Beach is to free up crane drivers to clear the yards. It’s that simple.”

However, at least in the thinking of some employers, reducing work opportunities at night at all of the ports also hits the rank-and-file longshoremen in their pocketbooks. Many longshoremen like nightwork, which carries premium pay, and they reportedly care very little about the union negotiators’ stance on chassis maintenance and repair, which is one of the issues preventing negotiation of a new contract.

ILWU negotiators want the PMA to guarantee the union M&R division, which accounts for about 10 percent of the ILWU membership, the right to inspect every chassis before it leaves the terminal. This is no longer possible because the shipping lines sold their chassis to equipment leasing companies, and those employers are not members of the PMA. ILWU negotiators want jurisdiction over “red-lined” terminals that years ago signed M&R contracts with other unions such as the International Association of Machinists. The PMA can’t make any such guarantee because they have no control over those contracts. ILWU negotiators want PMA to grant the ILWU M&R jurisdiction at off-dock locations run by the chassis-leasing companies, but the PMA has no jurisdiction over the off-dock sites.

Some rank-and-file longshoremen are reportedly upset over losing work opportunities on the night shifts because union negotiators are holding up contract approval over M&R work that is performed by ILWU mechanics. Employers hope that those general longshoremen pressure the ILWU negotiators to back off on chassis demands that the PMA can not grant even if the employers’ group chose to do so.

Just as the PMA will not discuss bargaining strategy, the ILWU does not do so either. In recent statements, and in letters to the PMA, the union has attacked he employers’ decisions to cut back on night work as being bad for productivity at the ports.  In a letter Monday to the PMA, the president of the three ILWU locals in Southern California said the decision to cease all vessel operations at night would not improve productivity.

“There is no evidence that there has been any effort to reallocate labor to clearing the yard,” said Bobby Olvera, president of ILWU Local 13. “We ask you to reconsider this unilateral action. It is not a sound management decision and will inflict direct damage on the industry and to retailers large and small. In the interim, ILWU Local 13 will continue to fill any orders for night-side vessel gangs it receives,” Olvera said.

Meanwhile, the war of attrition continues. The PMA, in a release on Monday, said: “The ILWU slowdowns and the resulting operational environment are no longer sustainable. The PMA has alerted the local port authorities to the deteriorating situation on the docks.” The PMA said that statement should be taken at face value, meaning the terminals are approaching complete gridlock. Others say is a not-so-subtle warning that if the slowdowns continue, the voices within the PMA calling for a lockout of the ILWU will get louder and will soon outnumber those who oppose a lockout.

It is generally agreed that no one wants a lockout. Rank-and-file longshoremen would receive no paychecks because they won’t be working. Terminals will forego revenue because they won’t be lifting containers on and off of ships, and shipping lines will lose thousands of dollars a day because their vessels will sit idle at anchorage. Furthermore, a lockout and the inevitable Taft-Hartley injunction that would follow would only prolong the agony because the work slowdowns would most likely continue.

On the other hand, cargo interests and shipping lines based in other countries seek action after eight months of inaction in the negotiations, and rank-and-file longshoremen are seeing their earnings diminish each week as employers reduce their hours, so each group is pressuring its respective negotiators to end what they consider to be complete nonsense.

January 9, 2015

US Congress keeps distance from ILWU-PMA labor talks
Filed under: Uncategorized @ 8:54 am

WASHINGTON — Rep. Janice Hahn, the California Democrat who co-founded and co-chairs the Congressional PORTS Caucus, this week told her colleagues that the International Longshore and Warehouse Union and West Coast waterfront employers reaching a labor contract was essential to the U.S. economy.

For shippers and transportation providers frustrated with long delays caused by alleged ILWU slowdowns at U.S. West Coast ports, Hahn’s comments on the House floor were hardly surprising. For many on Capitol Hill, however, West Coast port congestion is barely a blip on the radar, reflecting not only Congress’s limited ability to assist in the talks, but also how low a priority the issue ranks for the majority of legislators.

“You certainly have shipper groups such as the (National Retail Federation) banging the drum but that is still pretty low-level,” said a veteran D.C. executive involved in the maritime industry. “No one is coming into this new Congress thinking, ‘I have to deal with this.’”

The dearth of public pressure on the federal government to get both sides to iron out a contract also has helped keep the Obama administration on the sidelines. Granted, neither Congress nor the president could have called in federal mediators to aid negotiations, because the Federal Mediation and Conciliation Service only joins the table at the invitation of both parties. The ILWU did that this week, following an identical request from the PMA in late December.

Still, the limited attention the contentious negotiations and broader port congestion have received within the Beltway speaks somewhat to the disconnect between the freight industry and Washington. Legislators also are staying out of the fray because it’s unclear what the obstacles are to reaching a deal, the maritime executive said.

“You can’t expect D.C. to get in the middle of it when no one has articulated why there is no agreement,” he said.

And, with the ILWU denying it’s engaging in slowdown tactics and there being plenty of other factors contributing to port congestion — including rapidly growing volumes and chassis dislocation — few, if any, legislators want to risk taking sides. West Coast legislators, the majority of whom are Democrats with close ties to unions, don’t want to risk angering their more liberal base at the expense of scoring points with business interests, or vice versa, Jock O’Connell, a California-based international trade economist, told JOC.com.

It’s a delicate balance for legislators. Hahn last weekend attended a rally at an ILWU local in Southern California, where she sympathized with workers’ lack of a contract and urged them not to strike. Hahn told JOC.com that she was concerned that the PMA wasn’t putting the “right people at the table.”

ILWU President Robert McEllrath in late December challenged ocean carrier executives to be more involved in the negotiations. The PMA countered that “board and coast committee members, who represent carriers and terminal operators, have been intimately involved in these negotiations.” At the same time, Hahn also expresses sympathy for businesses that depend on moving goods efficiently through the Los Angeles-Long Beach port complex.

The murkiness of contract negotiations and political risk has left legislators with few avenues other than to write letters to the heads of the ILWU and PMA urging them to stay at the table and forge a deal. The Congressional PORTS Caucus, a bipartisan group of 90 members of Congress, on Wednesday sent a letter to the heads of the ILWU and PMA expressing its concern with how long talks have lasted and reminding both sides that the caucus is watching closely.

“We will continue to monitor this situation closely and urge both sides to reach a mutually acceptable resolution,” Hahn and Rep. Ted Poe, R-Texas, her co-chair of the ports caucus, wrote to McEllrath and James McKenna, the PMA’s chairman and CEO. “We stand ready to assist in any way to bring matters to a sustainable resolution and to move talks forward for the good of our ports, workers and businesses across our country.”

Although many individual business owners are feeling pain from port congestion, the impact on the total U.S. economy has been more of a “kick in the shins,” O’Connell said. That’s partly the reason Congress and the Obama administration haven’t given West Coast port congestion as much attention as shippers, carriers and ports would have hoped, he said.

So what would it take for more members of Congress to get more involved, both publicly and through back channels? A supply chain disruption that average Americans would feel, O’Connell said. Before the holidays, retailers warned that American children might not be able to get their favorite toy because of port delays, but that didn’t happen, he said. A Trader Joe’s store in Sacramento that O’Connell visited recently was out of Dijon mustard from France. “But that didn’t motivate me to write my congressional representatives,” he said.

National media has drawn sporadic attention to West Coast port woes, but the likes of MSNBC, CBS and CNN haven’t elevated the issue by covering port congestion and the seemingly stalled ILWU-PMA talks on a daily basis. Aside from a few stories from Politico and CQ Roll Call, well-read D.C. political publications, the Beltway press has largely ignored the issue, as well.

Considering the limited D.C. exposure longshore labor negotiations have received in a time of crisis, there’s little chance Congress will work to put longshore labor agreements under the purview of the Railway Labor Act, a move supporters say would reduce the threats of labor slowdowns and lockouts. Douglas Holtz-Eakin, president of the American Action Forum, a center-right policy institute, told JOC.com that passing legislation to put ports under the same law governing rail and airline industry would be a “big-lift.” Holtz-Eakin, a former director of the Congressional Budget Office, can’t recall any legislative language calling for such a change introduced in Congress.

That may be disheartening to shippers and transportation providers who don’t want to see another drawn-out longshore negotiation in their lifetime, but at least Congress is more in tune with port issues than in the past. The passage of the Water Resources Reform Development Act, which included measures aimed at reforming port funding, is the best example of legislators’ growing realization of the importance of ports to the U.S. economy, Hahn said.

But for most Americans and the national media, ports are “not that sexy of an issue,” she said. “I don’t go on MSNBC to talk about ports.”

Contact Mark Szakonyi at mszakonyi@joc.com and follow him on Twitter: @szakonyi_joc.

December 22, 2014

The Union That Stole Christmas
Filed under: Uncategorized @ 1:43 pm

The Union That Stole Christmas

Christmas may come late for many Americans this year thanks to a West Coast labor sprawl.

Manufacturers and retailers complain that the International Longshore and Warehouse Union (ILWU), which represents about 20,000 dockworkers on West Coast ports, has deliberately slowed down traffic during the holiday season to increase their leverage in contract negotiations. Because the union’s last collective-bargaining agreement expired in July, longshoremen can’t be disciplined for slacking off.

FedEx CEO Fred Smith noted in the company’s earnings call on Wednesday that congestion at ports !!has slowed down a lot of the retailing activity in late November and early December and led to a lot of ‘not in stock.’ So I suspect that you’ll see a lot of purchases of gift cards in lieu of merchandise.!!

The ILWU and Pacific Maritime Association, which represents port employers, are under a media blackout that bars them from discussing negotiations. However, prior contract snags have hinged on the association’s efforts to employ more technology. We hear that the two parties are also wangling over who pays for the ObamaCare excise tax on expensive !!Cadillac!! health plans that takes effect in 2018.

Employers ought to have the upper hand in negotiations since longshoremen are among the most generously compensated blue-collar workers in the country. Full-time dockworkers earn $147,000 annually on average on top of $82,000 in employer-paid benefits. Workers, retirees and their families don’t have to pay a penny for their health benefits, which includes dental and vision care.

The union is trying to gain an advantage by snarling up port traffic. The ILWU isn’t calling a strike because it doesn’t want to inflame public opinion and weaken its bargaining position, especially once people get a load of their generous pay and benefits. A strike might also compel the Obama administration to intervene to prevent economic collateral damage. Retailers and manufacturers commissioned a study this summer that estimated that a work stoppage could reduce U.S. GDP by $2 billion per day.

President Obama has so far been loath to antagonize the union by intervening. Businesses have exhorted the White House to appoint a federal mediator, as the president did in the fall of 2012 during a labor dispute on East and Gulf coast ports. Back then, the administration had a political stake in maintaining labor peace and keeping ports operating smoothly during the presidential campaign. Perhaps saving Christmas isn’t as important as winning an election.

BY ALLYSIA FINLEY / THE WALL STREET JOURNAL

 

 

November 25, 2014

Congestion worsens at LA-LB port complex with no relief in sight / JOC article
Filed under: Uncategorized @ 10:51 am

Congestion at the ports of Los Angeles and Long Beach grew worse over the weekend, with no relief in sight as late peak-season container volumes descend on the largest U.S. port complex.

“The vessels keep arriving and the trucks keep arriving,” said John Cushing, president of PierPass Inc., which manages the extended gates program for the 13 container terminals in the port complex.

Cushing said terminal operators are spending millions of dollars and taking extraordinary steps, including running very costly “hoot owl” shifts from 3 a.m. to 8 a.m. to relieve congestion in their container yards. But the cargo keeps building up at the terminals. According to the individual ports, combined container throughput in 2014 through August at the Ports of Los Angeles and Long Beach are 4.5 percent higher than the same period in 2013.

Each terminal operator has a slightly different story to tell. Some terminals say the congestion ebbs and flows depending upon chassis availability. A terminal will get enough chassis for several consecutive days to clean out its yard, but then the equipment supply dries up and the terminal is congested again.

“There are times when the imports are not moving. The numbers are outrageous —6,000 to 7,000 containers just sitting at the terminals,” he said.

Another terminal operator said he is working only two cranes each week against a vessel with a capacity of 10,000 20-foot containers, rather than five cranes as he should be, because the yard can not absorb any more boxes. Vessel operations are slowing down to the point where some terminals are in danger of having to tell vessel operators to slow down their arrivals because the ships can not be handled on schedule.

Large North American gateways such as Los Angeles-Long Beach, New York-New Jersey and Vancouver, Canada, have been struggling with congestion problems on and off throughout the year. The ripple effect of brutal winter weather in the eastern half of the continent, congestion and rail car shortages on the rail networks, truck and driver shortages and chassis dislocations are well documented.

In Southern California, truckers and terminal operators point to chassis being in short supply, in the wrong place at the wrong time or chassis being out-of-service as being the main culprit.

“Chassis are the Achilles’ Heel here,” said Fred Johring, president of Golden State Express and chairman of the Harbor Trucking Association of Southern California.

Ocean carriers during the last five years have exited the chassis business in Los Angeles-Long Beach and New York-New Jersey, selling the assets to chassis leasing companies. Terminals on both coasts immediately began to report that they did not have enough chassis, not because the overall supplies in the harbors were reduced, but because the business relationships involving cargo interests, shipping lines, terminal operators and chassis providers had changed.

Suddenly, truckers were told by a terminal that the chassis they needed were no longer being stored at the terminal, so the truckers had to make an extra trip to a location where the chassis suppliers stored the equipment. In instances where a terminal had chassis, many more chassis than usual were being “red-tagged” as being out of service and in need of repair.

Terminal operators say the chassis providers are refusing to pay the suddenly high repair costs that terminals with International Longshore and Warehouse Union labor are charging, or the chassis providers would only authorize repairs during the 8 a.m. to 5 p.m. day shift to avoid overtime pay. Chassis providers say they are authorizing repairs as quickly as they can, and have indicated to the ports that there are not enough skilled mechanics at the terminals to do the work.

As containers back up at the terminals, ILWU labor is working overtime just to do the normal work of unloading vessels, cleaning out the yards and processing trucks into and out of the facilities. According to figures posted on the website of the Pacific Maritime Association, the container volumes handled in Los Angeles-Long Beach in August were up 1 percent from August 2013, but the man-hours paid by the terminals were 20 percent higher.

Citing those numbers, PMA President Jim McKenna said, “when we’re using 20 percent more labor to do 1 percent more volume, we’re doing a lot of work.”

McKenna put the problems at the ports squarely on the shoulders of the chassis issue. “The root of all evils in the harbor is the chassis shortage,” he said.

The extra moves that longshoremen must make each day to clean up the container backlog are sucking up skilled labor, and terminals are reporting that the PMA has begun to rationalize the dispatching of positions like top handlers and rubber-tired gantry operators. Those positions can not be handled to part-time workers, known as casuals.

The extra work is also forcing terminals to use a higher percentage of casuals for driving yard tractors and other positions they can fill, but productivity normally drops when the percentage of casuals increases.

Terminal operators say a shortage of truck drivers both in the harbor area, and at the warehouses in the Inland Empire 50 miles from the ports, is causing the dwell times for containers and chassis to skyrocket.  Alex Cherin, executive director of the Harbor Trucking Association, said the HTA saw the driver shortage surface several years ago as a result of the clean-trucks program in Southern California. The truck and driver population of mostly owner-operators went from 15,000 to less than 10,000 as non-compliant trucks were phased out.

HTA took actions such as helping to develop a driver training program at a local community college, but the overall problem was masked by the economic recession. Now that the recession is over, the driver shortage is all too apparent, he said.

“You hear more about it on the drayage side, but it exists throughout the industry. It’s a national problem,” Cherin said.

As a result, hundreds of chassis with empty containers are sitting idle at the 1.5 billion square feet of warehouse and distribution facilities throughout Southern California, effectively taking the chassis out of use. Trucking companies say the beneficial cargo owners are so desperate to get their inbound loads that they are telling drivers not to bring the empties back to the harbor and be forced to wait two hours or longer to be processed, but rather to go “bobtail” right to the harbor as soon as the inbound containers are cleared for pickup.

Terminal operators confirm that the number of dual transactions (empty container into the terminal and loaded import container out of the terminal) have plummeted. Cushing said that PierPass is meeting with chassis providers, truckers, shipping lines and terminal operators in an attempt to work out at least a short-term solution to problem. After having met with executives of the three largest equipment providers — Direct ChassisLink Inc., Flexi-Van and Trac Intermodal — PierPass was told a long-term solution to the chassis problems will not materialize until early 2015, Cushing said.

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