CORTEZ News Article



West Coast Ports Update: Labor Contract Near
		Published 20021220
		Mark.Schmittling@CORTEZteam.com

20021213 Update: The Journal of Commerce reports today that it is "likely, although not yet certain" the West Coast dock workers will ratify the new labor contact. 92 percent of the members of the caucus of the International Longshore and Warehouse Union recommended "that its membership approve the tentative contract reached last month with waterfront employers." 20021031 Update: The worst of the holdups of container movements on the West Coast ended two weeks ago, but congestion is still an accurate word to describe conditions there. The Journal of Commerce quotes a Far East shipping executive as saying, "Productivity is still down by over 30 percent in Oakland, the high 20 percent in Pacific Northwest ports and around 10 percent in the Los Angeles/Long Beach area." It is estimated that it will take still approximately three or four weeks to normalize the flow of imported cargo on the West Coast. Adding to the congestion are the delays in getting the empty containers back to Asia to get reloaded. The snags in U.S. ocean bound freight from the Far East is relieved by flying the cargo in. The JOC quotes one official as saying that "there will be around 70 charter flights to the U.S. this month, which is 2-1/2 times more than normal." Of course, the steep increase in demand for air freight has seen an equally steep increase in air rates. The freight for a jumbo jet is equal to about eight TEUs (Twenty-foot Equivalent Units) and can cost hundreds of thousands of dollars to charter. Meanwhile, the labor dispute bitterly continues. Management claims that union employees are working slower and accuses them of purposely impeding "the flow of cargo since the end of a 10-day port shutdown Oct. 9." The Unions accuse the Justice Department of siding with management and claims that meetings between management and the Justice Department have occurred "without ever inviting union officials to provide their own perspective." According to the JOC, the Unions claim that normal productivity is slowed down for the following reasons: Container yards filled beyond capacity because of the backlog of containers and a shortage of yard space, forcing longshoremen to sift through stacks to retrieve boxes Frequent and uncertain ship arrivals compounding congestion Greatly increased truck traffic on the docks, adding to the congestion A shortage of skilled labor to handle the increased volume of cargo An acute shortage of chassis, and frequent equipment breakdowns form overuse More hazardous work conditions on the docks, leading to closer surveillance by state safety inspectors 20021025 Update: As reported by the Journal of Commerce, management at West Coast ports has documented that Union workers have started a "concerted, systematic work slowdown impacting productivity at every major port." The percentage in lost productivity calculated for the ports is: Oakland, 34 percent Portland, 29 percent Seattle, 27 percent Tacoma, 19 percent Los Angeles-Long Beach, 9 percent Management also noted the following examples of ways the union is shunning full productivity: work crews lack supervisors or equipment operators which renders "the terminal unworkable." paper work is being lost and "key marine clerks" are reporting to work late. workers often call for equipment inspections or ask for clarification of well known procedures the JOC also states that "workers trained for skilled operating positions regularly took positions that had nothing to do with their training, resulting in a shortage of skilled operators at key positions on the terminals." These problems, as well as the accumulation of vessels due to the ten day lockout, mean more congestion and delays can be expected on the West coast. At the Los Angeles-Long Beach ports there are still more than 100 vessels at anchor. We have also received word that the carrier Lloyd Triestino will impose a Surcharge of $500 on 20 foot containers and $1000 on 40 foot containers destined for unloading on the West Coast. Other steamship lines will follow and impose stiff congestion charges if the congestion and delays continue. 20021022 Update: Congestion at West Coast ports is not diminishing. The backlog of vessels grew this Monday as the ships worked over the weekend were replaced by fresh arrivals from Asia. The Journal of Commerce reports "117 vessels were at berth or waiting at anchorage Monday at the nation's busiest port complex, and that number had climbed as high as 121 during the weekend." Meanwhile, management did not file a complaint with "the U.S. Department of Justice about alleged slowdowns by the International Longshore and Warehouse Union", but it is considering doing so. Management claims that dock workers are "showing up late to their jobs, killing time at terminal gates and moving slower than usual throughout the facilities." Both sides in the labor dispute "are scheduled to return to the bargaining table Thursday under the guidance of the Federal Mediation and Conciliation Service." Truckers are also complaining of congestion at the harbors inside marine terminals on the West Coast. Rail lines are, however, open and running smoothly. This weekend BNSF "moved 1,500 containers...and was preparing to ramp up to 3,000 units" on Monday. Importers desiring to avoid the current hassles at West Coast ports have turned to having their goods flown in. Thus the demand for air freight has significantly increased. Korean Airlines and Asiana Airways are seeing large backlogs of freight at their terminals. Air freight rates from Japan have literally skyrocketed two to three hundred percent since the West Coast labor dispute forced lockout conditions. 20021015 Update: At West Coast ports the 10-day lockout has left "a massive backlog of cargo" according to the Journal of Commerce. On the one hand, management claims that the productivity levels of dock workers has "been about 25 percent below normal." The International Longshore and Warehouse Union says, however, "that the problems result from congestion." In the current situation, getting the cargo jam cleaned up might take some time. There is an 80 day back-to-work injunction in effect until December 27, 2002. Both union and management are waiting for "a federal mediator to reschedule negotiations." The JOC also reports that the West Coast labor dispute might mean "shippers could be socked with hundreds of dollars worth of additional freight costs to get a container to its final destination." Yet the information on rate changes is contradictory. One LA freight forwarder is quoted as saying that "steamship companies are very vague" on this matter. The West Coast labor dispute has created a sudden increase in demand for air cargo space which has in turn created a "growing backlog of freight" at airports in Beijing, Taipei and Hong Kong. Demand for air freight space in Korea has also surged, with Korean Air reporting that it "has a backlog of more than 1,000 tons at its hub in Incheon." Air freight rates too have significantly jumped up and keep rising as congestion on the West Coast continues. The rates can change daily. One forwarder complains that "Rates can go up as much as $1.50 a kilo." Airlines offer an express service which guarantees space on a flight, but the price is much higher. Northwest Airlines "select 100 service, for example, is priced about 70 percent higher than its Select 300 service." The JOC also reports that forwarders are booking freight "that normally moves on ocean vessels." Korean air is booking food products for its flights. 20021011 Update: 200 vessels at West Coast ports could take up to at least six weeks to get cleared out, predicts the Pacific Maritime Association. The vessel congestion has contributed to truck and rail congestion at all ports on the West Coast "especially in Los Angeles-Long Beach, the nation's busiest port complex", states the Journal of Commerce. Given the uncertainty of how long the intermodal congestion may last, the Transatlantic Conference Agreement announced "a temporary congestion surcharge of $500 per TEU." This charge could quite possibly be "adjusted downward" and was simply announced "as an option of putting in place a surcharge a month from now." The Transatlantic Conference Agreement, TACA, has the following members: Atlantic Container Line, Nippon Yusen Kaisha (NYK) Line, Hapag- Lloyd, Orient Overseas Container Line, Mediterranean Shipping Co., P&O Nedlloyd, and Maersk Sealand. 20021010 Update: The Journal of Commerce reports today that on the West Coast the port workers returned to work at 6 p.m. yesterday, however, their return to work does not mean the situation has returned to normal. A serious question remains: will any more labor disruptions or slow downs occur that would impede the unloading of the 200 vessels still sitting in the harbors along the West Coast? Presently, employees at West Coast ports are working under "a temporary restraining order that now runs through Oct. 17." The request to impose the 80 day cooling off period is scheduled after this date. Union spokesman, Steve Stallone, said that workers would return to their jobs but he also warned "that due to congestion at the ports it will be impossible for workers to ramp up to full productivity overnight." One union official predicted that management would accuse the workers of a slowdown. Due to expected congestion at the reopening of the terminals, some truckers are advising shippers that they will be charging an extra 25-40 dollar per hour if their drivers have to wait for any extensive amount of time to pick up cargo. Several shipping lines have refused bookings eastward from Asia to the West Coast of the United States: Maersk Sealand, Hanjin Shipping, Senator Lines, Mediterranean Shipping Corp, China Shipping Corp, Evergreen Marine, Yangming Marine Transport Corp, and "K" Line. A significant concern for shippers is the likelihood of equipment shortages. The availability of containers is dwindling, since those on the West Coast have not been unloaded and returned to Asia to be reloaded with more cargo. An executive with the Grand Alliance suggested "chartering a ship just to carry the empties back to feed the supply line." The JOC also reports that "air-freight volume has jumped to four or five times normal levels and could go higher if shippers can't get space on ships." 20021009 Update II: As of 11:30 a.m. today the New York Times writes that Federal District Court Judge William "issued a temporary injunction" which will force the workers in the West Coast labor dispute at 29 ports to return immediately to work. The judge "would hold a hearing in a week on whether to grant a full 80-day injunction." The injunction follows Labor Secretary Elaine L. Chao's announcement that she "was unable to negotiate a 30-day contract extension to reopen the ports." The union agreed to the extension but management "rejected an extension, saying it feared that the longshoremen would engage in a work slowdown." CNN NEWS states that under the injunction "the ports are scheduled to reopen with the 6 p.m. PT (9 p.m. ET) shift Wednesday." The question remains as to if the 10,500 union members will provide 100 percent productivity levels once they return to work today. 20021009 Update I: The opening sentence from a lead article in the Journal of Commerce this morning states: "Union longshoremen agreed to go back to work under a 30-day contract extension, but the Bush administration will still seek a court order to force West Coast ports to re-open." The contract extension was "part of a deal to avoid invoking the Taft-Hartley Act" which would require the workers to get back on their jobs during a 80 day "cooling off" period. The San Francisco Chronicle notes "a huge logistical nightmare created by the lockout" which has idled 10,500 dock workers at seaports from Seattle to San Diego. Several major steam ship lines, such as Evergreen, "K" Line and MOL have declared force majeure. In a shipping contract, a force majeure clause allows "companies to be discharged from their obligations to perform under a contract because of forces such as acts of war, natural disasters, or labor strife." Some logistic experts predict it will take six to eight weeks for a return to normal on import flows from the West Coast--if there is no work slowdown or labor turmoil during this time. 20021008 Update II: This afternoon the Journal of Commerce reports that the White House will have the 29 West Coast ports opened by court order. Since there seems to be no immediate settlement to the lockout, the Bush administration will impose an 80 day period of "cooling off" during which the longshoremen will go back to work. The Journal of Commerce writes: "Union dock workers said earlier that they expect to get back to work today." The Union started calling in the crews for the night shift. The expected reopening of the ports, however, "will be anything but smooth." It could take up to "six weeks to work off the backlog of cargo and containers." And the court order to get back to work could be grudgingly greeted by returning workers with a slower work pace, reports the Journal of Commerce. 20021008 Update I: Yesterday the White House took the first step to end the West Coast port lockout by appointing a three member board to "assess the economic effects" of the labor dispute. The report from this board can be used in a Federal court to get an injunction against the lockout. Under the Taft-Hartley Act, President Bush can order management to stop the lockout and get the workers back to work during an 80 day "cooling off period." The board will report its findings to the White House today. The Journal of Commerce states that "if an injunction is granted by the court, the ports could be reopened in a matter of one or two days." Asian shippers are saying that a lockout lasting more than ten days would mean serious losses because after ten days, "many shipping contracts are automatically voided if goods have not been delivered." Chairman of Asian Forwarders and Shippers, Victor Mok says, "A 10-day lockout would be catastrophic for Hong Kong's shipping industry." Many shippers from Asia are entering the busiest shipping month as demands increase for retail products for the holiday season. Some vessels from South Korea have been diverted to Vancouver "or to East Coast ports." There has also been a steep increase in air freight costs. Malaysia reports air freight charges increasing "as much as 60 percent." But the usual increase in air freight rates from Asia has been only 15-20 percent because of the lockout. The LA Times also reports that "the National Association of Manufacturers released a survey suggesting that the effects of the shutdown are substantially greater than the often-cited figure of $1 billion a day." 20021007 Update: Following last week's work slow down by West Coast longshoremen, the port operators ordered a lock out of 29 ports in California, Oregon and Washington. On Monday October 7, 2002 there are about 200 vessels idle at ports with several ships still en route from the far east. According to the Journal of Commerce though, the lockout still appears far from being settled. Negotiations between employers and employees at the ports stopped last night "after union longshoremen rejected the latest contract offer from management." Meanwhile, the Bush administration today "named a board of inquiry to assess the economic damage resulting from the West Coast port shutdown." This act can be seen as the first step in a government push to get the labor dispute resolved. Importers and exporters are trying to push the government to do something, specifically to impose the Taft-Hartley Act, that would force an 80-day cooling off period during which the union would go back to work during negotiations. The Journal of Commerce also reported that rail carriers have "stopped accepting international westbound containers," although the major rail lines, Union Pacific and Burlington Northern Santa Fe, state that service between west and east is still proceeding without interruption. Especially hard hit are importers and exporters of perishable commodities. According to the Journal of Commerce, "beef, pork and poultry processing facilities across the country are full, crammed with produce that can't be exported." Automotive News also reports that "auto makers and suppliers warn that the situation will rapidly deteriorate next week if the ports do not reopen." In Fremont, California., United Motor Manufacturing, which builds the Pontiac Vibe and Toyota Corolla, Voltz, and Tacoma pickup, "has stopped production due to the longshoremen strike." Needless to say, it is anticipated that all scheduled cargo flights and charters will be completely full and the cost of air freight rates from the far east will take a sharp increase as demand skyrockets. 20021003 Update: Since Saturday September 28, 2002 not one container has been unloaded at the port of LA. The Union’s second lockout still remains in effect as of today. According to the Journal of Commerce, the "Longshore and Warehouse Union and the Pacific Maritime Association agreed to meet today with a federal mediator." Most steam ship lines agree that, although the situation is not yet critical, if the lockout should extend to several more days, there will be serious problems. And some analyst are cautioning against a fast solution to the labor dispute at the ports, even with the intervention of a federal mediator. Ed Wolfe, quoted in the JOC states, "Our sense is that any government intervention is unlikely to occur before this weekend at the earliest." The JOC summarizes the situation of some carriers: The Grand Alliance, a consortium that includes Orient Overseas Container Line Ltd., said 11 vessels belonging to members are snarled in delays. Neptune Orient Lines Ltd. said, "As of [Friday] we'll have six vessels directly affected." Evergreen Marine Corp. and Yangming Marine Transportation Corp. reported that at least seven ships were unable to load or forced to anchor offshore at U.S. ports. Kaohsiung Harbor Bureau said most of its lines are maintaining normal schedules to the U.S. West Coast, including 26 sailings or 40,000 TEUs a week. Each takes 12 to 14 days to arrive. Hyundai Merchant Marine said delivery of cargo bound for the West Coast may be held up for two or three days. 20021002 Update: The Journal of Commerce reports that rail moves from the West Coast to the inland Unites States are slowing down considerably. Carriers are also beginning to refuse "export containers bound for the West Coast." Perishable agricultural goods are beginning to rot at ports. The JOC also states that the situation is becoming critical for manufacturers who rely on just-in-time logistics which avoids the stockpiling of inventories. Retailers who are expecting heavy import volumes at this time to fill their stores for the holidays are worried that there will be a lack of products to meet the demands of consumers. An alternative for importers--shipping by air--is very costly and even when it can be done, under the present circumstances it would be impossible to accommodate all import shipments destined for the USA. The worries and concerns of importers and exporters will not go away once the West Coast labor crisis is resolved this week. These persisting questions will nag them in the days and weeks following a settlement to the strike: Will there be enough chassis when the terminals reopen? Will there be demurrage and storage charges on containers stuck at ports and rail yards? If so, who is liable to pay them? Will the ripples of the labor stoppage on the West Coast mean a shortage of containers in Japan, Korea and China for goods destined for the United States? If so, how long would a shortage of containers last? 20020930 Update: The work slowdown on the West Coast has caused productivity to drop "about 50 percent" according to the Monday edition of the Journal of Commerce. On Sunday a few vessels were worked, but a number of vessels were still unloaded on Sunday night. There were about "100 container, bulk and breakbulk vessels" ready to get unloaded yesterday. The Journal also reports that "employers placed no orders for longshoremen Sunday night and did not plan to order any labor for Monday morning." Since this is the peak season for imports, any prolonged delay in the shipment of merchandise could leave stores with empty shelves for the Christmas Holiday. The PMA board met Sunday afternoon and agreed unanimously that an open-ended lockout was in order, since the union was not up to full productivity. A federal mediator came from Washington to San Francisco on Friday, but in order for mediation to be effective both labor and management must agree to it. As of now, the union has emphasized that it does not want mediation. 20020923 Update: Last week on Wednesday the Journal of Commerce reported work slowdowns at West Coast ports. The labor dispute between longshoremen and the Pacific Maritime Association (PMA) in Southern California which began in May seemed to be at an impasse. Slowdowns are a tactic used by the union to spur management to speed up contract negotiations. Slowdowns were also used "during contract negotiations in 1999 and 1996" by the longshoremen in California. The slowdown which began last week was caused by the union when it failed "to provide enough skilled labor, especially crane operators, to handle the work." But the terminal operators threatened a lock out of the union dock workers and by Friday cargo handling at the busiest port in the United States returned to almost normal levels. This Monday the Journal of Commerce reports that although workers at the docks were "still slowing down operations" the slowdown wasn’t significant enough to justify a lock-out. Nevertheless, an agreement between the union and management is still not a light at the end of the tunnel. Since it’s a busy time at the west coast port for imports of Christmas merchandise for the holiday season, shippers and importers are anxious to have a settlement 20020729 Update: The potential for a strike of dock workers on the West Coast became suddenly more real last Friday as the Journal of Commerce reports that "the International Longshore and Warehouse Union caucus empowered the union's negotiating committee to go directly to the union membership to seek strike authorization." This does not automatically mean the green light is on for a strike, but the ILWU will be more prepared to act quickly for a strike if a vote for one is called. A strike as well as work slowdowns may not seem pressing at present because the ILWU has extended last year’s contract until mid-August. What is pressing and present, however, is the growing uncertainty about the upcoming imports after they arrive on the West Coast. A strike any time in August would hit West Coast ports when they are bustling with import activity from merchandise coming in for the Christmas season. The union stated that "it will not be available to resume negotiations with the Pacific Maritime Association until Aug. 13." 20020708 Update: Contact negotiations between the Longshore and Warehouse Union and the Pacific Maritime Association continue on Monday July 8. No settlement at this time appears imminent and so far both sides have rejected each other’s proposals. Although there is still no settlement, no slowdowns or work stoppages have occurred and seem at this point unlikely to occur. Again, the old contract is extended daily and at the end of each day both sides determine that it continues until tomorrow until a new contract is agreed upon and ratified. 20020703 Article: The International Longshore and Warehouse Union on the West Coast still has not reached an agreement, but the current contract they are working under is being extended daily which keeps the "no-strike" provision in effect. The Pacific Maritime Association and unions are far from harmony on some issues, but a caucus to ratify a new contract by July 22 is on the table. Although a strike doesn’t seem likely, the Journal of Commerce says that the "Bush administration would most likely intervene immediately, ordering longshoremen back to work during a cooling-off period." The fear at this time of importers and exporters is a work slowdown which would delay inbound and outbound shipments. In the strikes of 1996 and 1999 the longshoremen used work slowdowns to push importers to pressure the Pacific Maritime Association to conclude a contract and get trade back to normal.

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