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Previously from JJB

January 26, 2015/  Volume 2015, Issue 2

ILWU/PMA West Coast Labor Contract Negotiations: A Breakthrough?

Dear Valued Customer,


We received word today that there is progress being made in the labor contract negotiations between the Pacific Maritime Agency and the International Longshore and Warehouse Union.

Peter Friedmann who practices government relations in Washington, D.C. wrote, "A long week of bargaining just concluded a little while ago and with some success.  This weekend a tentative agreement was reached on the difficult chassis issue.  The pace of the dialogue and information exchange picked up speed after the chassis issue [relating to ILWU jurisdiction over chassis repair and maintenance when conducted at locations off the terminals] was concluded.  The parties continued to work on the remaining issues with positions exchanged between both parties.  PMA and the ILWU will work internally tomorrow morning to prepare for tomorrow afternoon's bargaining session.

The pace of the negotiations has visibly picked up and the dialogue is more constructive.  It seems that both parties are now eager to wrap up these negotiations.  Once negotiations are concluded, the parties will have to negotiate the foreman's supplement as the final part of the negotiation.  But it was a productive weekend and there is some light at the end of the tunnel."

Earlier this month, the PMA eliminated night time ship-to-shore container crane operations at the ports of Los Angeles and Long Beach in order to concentrate manpower on clearing congestion at terminals. This led to mass rallies of more than 5,000 people in Los Angeles and over 700 members in Tacoma as union locals called on carriers to resume night time operations.

November traffic totals for the USWC ports showed a slight decline while volumes to the East Coast terminals climbed by 14.6 percent, which underlines the extent to which goods were still being switched to an eastern seaboard routing. According to the American Shipper, on Friday, Harold Daggett president of the International Longshoremen's Association, the East Coast longshore union, said "We will closely monitor any attempts by shippers to try and divert cargo to ILA ports. This tactic by employers will not be successful - we are one and will support our ILWU sisters and brothers."


While the pace of negotiations picking up is a good sign, the reality remains that congestion at the ports is likely to take a significant while before it returns to any sense of normalcy. The number of ships waiting for berths at the port of Los Angeles and Long Beach harbor climbed to 21 on Saturday. Including ships not at anchor because of congestion, there were 32 ships.

Other factors besides the PMA/ILWU contract stalemate have contributed to the congestion, including the deployment of huge containerships by the ocean carriers, leading to increased times at berth per vessel handled at the terminals while putting pressure on equipment and storage space. And the huge ships keep getting larger: Japan's MOL is in the market to buy 20,000-TEU new-builds through a third party charter deal, according to news reports. If that occurs the vessels would be the largest in the world, overtaking the 19,224-TEU MSC Oscar. The largest containership currently in service is the 19,000-TEU CSCL Globe.

In addition, the formation of alliances such as the 2M, G6 and the CKYHE has meant more lines loading on the same vessel, complicating yard operations and leading to more moves within and between terminals, especially when it comes to loading and discharging trains, along with increased truck congestion and driver shortages.

Congestion at U.S. West Coast ports is expected to continue "well into 2015," according to Drewry Shipping Consultants. Drewry says U.S. shippers should prepare for further disruption and ship arrival delays.

Chassis maintenance and repair is an issue that rattles the nerves of longshore unions on both coasts. After owning, providing and maintaining chassis for more than 50 years, shipping lines in the U.S. trades have sold those assets to chassis-leasing companies and pools in order to escape the huge costs associated with chassis. Since shipping lines and terminal operators are members of the PMA, many, but not all of them, have a contractual relationship with the ILWU for M&R work.

The chassis-leasing companies are not PMA members and they are under no obligation to hire ILWU mechanics for M&R work. The union therefore fears the loss of hundreds of jobs, and has reportedly made three demands in the negotiations regarding chassis. The ILWU wants to inspect every chassis before it leaves the terminal. The ILWU wants jurisdiction over those terminals that have a contractual relationship with the International Association of Machinists, which does chassis M&R work at some terminals. The ILWU also wants jurisdiction over any off-dock sites operated by the chassis-leasing companies.

The PMA believes that requiring an inspection of every chassis by ILWU mechanics would make the congestion much worse.

Now that the PMA and ILWU have reached a tentative agreement concerning the chassis problem, this indeed is a good sign, but details of the agreement are not yet available.

At the present moment, containers take an average of more than two weeks to move through Los Angeles and Long Beach terminals, a process that should take no longer than three days. It is the worst congestion faced by the two ports in more than a decade and could continue for some time. Our customers are advised to keep this in mind as delays at the West Coast Ports are expected to continue for quite some time despite the progress being made between the PMA and ILWU and customers should plan accordingly.


In addition, we have received news from American Shipper reporting that "As of Jan. 26, schedules for 15 out of 25 services in BlueWater calling the Port of Oakland show some sort of schedule disruption regarding Oakland either by showing temporary skips for voyages or omitting the port altogether for the foreseeable future," said BlueWater Reporting analyst Bessie Howard. "It appears most of these services are skipping Oakland between the last week of January through mid-February and will pick up calling Oakland again towards the end of February/beginning of March."


According to BlueWater Reporting, transpacific G6 Alliance services SE2, SE3, PA2, CC4 and SC1 all show skips for voyages that would be coming to Oakland within the next month. "Some service schedules show temporary long-term omissions to Oakland, like Evergreen's MD1/PM1, which has stopped calling Oakland and will return calling the port in early April, the CKYHE Alliance PSX, which shows a return to Oakland in early March, and the JPX operated by NYK, OOCL, Hapag-Lloyd and Hanjin, which shows drops to Oakland through the end of February," Howard said.

"Other services, like K-Line's CALCO-B, CKYH Alliance's PSW/CALCO-Y and Hamburg Sud's WCNA/Central America Service, do not show a return to Oakland after being dropped from the schedule mid-January."
Thank you for your time and if you have any questions, please contact your nearest James J. Boyle & Co. representative.  


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Kent Sunakoda


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