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22 CONTAINERISATION INTERNATIONAL www.containershipping.com April 2014
THE stakes are high, and all those involved
are acutely aware of the consequences
should something go awry when two
sizeable delegations meet in San Francisco
next month.
On one side will be a large team of senior
executives representing terminal operators,
ocean carriers and stevedores. On the other
will be probably an even bigger group of
officials from the International Longshore
and Warehouse Union.
Caught in the middle and unable to
do anything more than just watch on the
sidelines are US importers and exporters,
ranging from the likes of supermarket giant
WalMart to small mid-west farmers with
little experience of international trade.
But whatever their size, beneficial cargo
owners and freight forwarders, along with
Washington, Wall Street, the business
community and even the general public,
will be monitoring events closely.
Although there will plenty of people
around the negotiating table, most of
the talking will be left to just two of
them James McKenna, chief executive
of the Pacific Maritime Association,
which represents employers, and Robert
McEllrath, president of the ILWU or Jim
and Bob as they are better known to their
respective colleagues.
What they both hope to achieve is a
new contract for the 23,000 registered
longshore workers employed at the 29
ports along the US west coast without any
industrial action that would disrupt terminal
operations, with inevitable consequences
right along the supply chain.
But this is not just a local issue. West
coast ports may be losing market share,
but they still handle some 45% of total
US container volumes. Combined volumes
through Los Angeles and Long Beach came
to 14.6m teu in 2013.
Furthermore, Pacific coast ports,
ranging from the two southern California
heavyweights and Oakland, close to San
Francisco, to Seattle and Tacoma just south
of the Canadian border, support some 9m
US jobs with a domestic business impact
of over $1trn, according to Mr McKenna.
Around 12% of US GDP is tied to cargo
moving to and from US west coast ports,
the PMA estimates.
Promising signs
With so much at risk, shippers started
drawing up contingency plans some time
ago, supposedly ready to spring into action
at the first hint that talks may be running
into trouble.
Yet early signs have been promising,
with Mr McKenna stating in no uncertain
terms that he does not anticipate any
strike action.
Instead, he expects a new labour
contract covering US west coast
dockworkers to be agreed by the end of
July without any cargo disruption.
The existing six-year contract expires
at the end of June. Although a new one
is unlikely to be inked by then, with the
timetable likely to overrun as it did in
2006, the PMA president does not see that
as a cause for alarm.
I dont think so, Mr McKenna replied
unequivocally when asked whether there
could be a strike.
Other employers are also sounding
positive about the forthcoming talks.
We have every belief in Jim and Bob
that the bargaining will take place in good
faith, says Gene Seroka, president of APLs
Americas division and a PMA board member.
Both sides have much at stake this year
as we forge ahead with a new contract to
promote commerce, employment and the
well-being of supply chains.
Mr Seroka is confident that the union
fully understands the competitive
pressures that west coast ports face,
and does not want to jeopardise their
commercial standing in the global shipping
and logistics industries.
Mr McEllrath has not commented, but
signals from the union are nevertheless
equally promising.
Neither side can afford a strike, one ILWU
source told Containerisation International.
There wont be any disruption.
Despite those reassurances, shippers
are unconvinced and already making
contingency plans for possible labour unrest
during the negotiations, having expressed
concern about the relatively short time
available in which to come to an agreement.
The Transpacific Stabilization Agreement
wrote to the PMA in early March on behalf
of cargo interests represented on TSA
shipper panels, asking for the talks to be
brought forward. The PMA negotiates on
behalf of 72 members that operate on the
US west coast, including ocean carriers,
terminal operators and stevedores.
Mr McKenna does not think an earlier
start date would guarantee a contract
agreement ahead of the June 30 deadline.
In 2008, the two sides began talking in
mid-March but failed to reach agreement
before the expiry date.
From March to the beginning of June,
we got nothing done, he told the recent
Trans-Pacific Maritime conference. There
was no pressure to move.
Starting early is not going to change
what we get done, there is plenty of time
and I am optimistic we will get a contract
without disruption, he said.
Neither does he think having the
governments Federal Mediation &
Conciliation Service sitting in on the
negotiations would be helpful.
Their involvement would not necessarily
be a good thing it means we cannot do it
ourselves, he insists. The union side agrees.
But Washington will be watching,
ready to intervene should the ports shut
down, as happened in 2002 when the
Taft-Hartley Act was invoked, enforcing
a mandatory cooling off period, but only
after a nine-day lockout.
Tough talking but no disruption as employers remain condent of reaching
an agreement with the ILWU without labour unrest, writes Janet Porter
STRIKING A DEAL
US PORTS/DOCK NEGOTIATIONS
PORTS
www.containershipping.com CONTAINERISATION INTERNATIONAL 23 April 2014
A repeat of that is what alarms the
business community, although talk of
shifting cargo to other gateways, such as
Canadian and Mexican west coast ports,
or those on the US Gulf and eastern
seaboards, is seen as a largely empty threat.
Rickmers Group chief executive Ron
Widdows, who spent 30 years with APL
and is a former chairman of the TSA,
questions where shippers who currently
move cargo through Los Angeles and Long
Beach which together form one of the
worlds largest container port complexes
could realistically go as an alternative.
Contingency planning was always a bit
of an over-used term, he claims.
Cargo flows the way it does because
that is the way the customer wants it to
you cannot make massive changes to your
supply chain. The west coast has to work,
Mr Widdows asserts.
But nervousness within the shipper
community reflects memories of what
happened in 2002 when employers locked
out ILWU members during protracted and
confrontational talks.
More recently, there were very difficult
negotiations between east coast longshore
workers and employers last year.
In late 2012, a dispute involving clerical
workers shut most container terminals in
Los Angeles and Long Beach for more than
a week when ILWU members refused to
cross picket lines.
A jurisdictional dispute involving the
lost to the US east coast as more lines
introduce services from Asia via the Suez
Canal, to deploy ships of up to around
9,000 teu displaced by even larger vessels.
Adding to the pressure is the fact that
the region seeing the fastest population
growth is the US southeast.
With cargo volumes through US west
coast ports growing around only 1%-2%
over the past few years, Mr McKenna is
warning that the picture was not very
rosy, clouded by the new competitive
environment in which shippers have more
options than ever before.
There is too much at risk and we
cannot afford to go backwards, he says.
Maintaining our competitive advantage is
more important than ever before.
But he will also have plenty of positive
points to raise. Robotics are gradually
being introduced to some terminals in Los
Angeles and Long Beach, including OOCLs
state-of-the-art Long Beach Container
Terminal now under construction, the TraPac
facility jointly owned by Mitsui OSK Lines
and Brookfield Asset Management, and
APLs Global Gateway South.
New technologies are still regarded
with some suspicion in union circles,
though, but Mr McKenna is in no doubt
about the benefits.
Since the 2002 contract which marked
the start of new technologies on the
waterfront, with automation also featuring
prominently in the 2008 agreement, the
registered workforce has grown by 34%.
Modernising terminals protects union
jobs, he will be telling the ILWU leadership.
Furthermore, peaceful resolution of
a new contract is critical in preserving
manufacturers, shippers, and retailers
confidence in the ports as reliable and
problem-free gateways for products
moving in and out of the US, he says.
We need a contract that works for all of
us, one that addresses todays economic
realities, continues to provide for employees,
retirees and their families, meets our new
regulatory obligations and strengthens our
combined efforts to fend off competition
to our west coast ports as vital gateways for
goods moving in and out of the US.
Yes, the stakes are high, and there will
be plenty of hard bargaining but both
sides expect to have a new contract in
place by the end of July, without any
damaging industrial action.
ILWU over who should handle certain tasks
at Portland almost drove away the Oregon
ports largest customer, Hanjin Shipping. A
settlement of sorts was finally reached in
March.
Carriers reckon that for every day a port
is out of action, it takes between five and
seven days to recover.
Health benefits
Top of the agenda at this years contract
negotiations between the PMA and ILWU
will be medical benefits, and in particular
who should pay the tax due on so-called
Cadillac plans such as those enjoyed
by ILWU members, to be levied under
President Barack Obamas affordable-
healthcare programme. The two sides may
agree on a three-year rather than six-
year contract with a view to revisiting the
medical benefits should the law change
after the next US presidential elections.
Pensions, automation and union
jurisdiction are also expected to figure
highly, with wages usually less of an issue
than might be expected.
The PMA will be drawing ILWU attention
to the fact west coast ports share of US
container volumes dropped from the
long-term average of around 50% to 48%
in 2012 and to 45% last year, as they
continued to lose discretionary cargo that
moves beyond the immediate hinterland.
As well as competition from ports in
Canada and Mexico, cargo is also being
Negotiators hope to avoid scenes like these, when the Port of LA was shut for more than a week in
late 2012. Photo: 2014 Nick Ut/AP
US PORTS/DOCK NEGOTIATIONS
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