Labor experts optimistic mediators will broker PMA-ILWU deal

Below please find the latest on the West Coast ILWU / PMA negotiations as told from this AM’s JOC.  Although a deal should be reached, some say not so fast. The situation now has bubbled over to the East Coast vessels. There are thousands of containers back-logged in origin and transit ports awaiting space to over booked East Coast vessels. Some vessels are 100-200% overbooked right now. Some carriers are not taking any bookings until the end of January. Cnees are willing to get space “at any cost” right now from what we are being told from various sources.

WWL is working diligently to maintain and grow our space allocation on these vessels and attempting to control the costs in this “ crisis laden atmosphere “. Many of us, with decades of experience in the industry, have never seen anything like this. So far so good however regarding the WWL space right now,  but as we get further into the very busy Pre-Chinese New Year Rush, the situation for sure, will not get any better.

 Subject: Labor experts optimistic mediators will broker PMA-ILWU deal

Don’t expect any immediate negotiation breakthroughs when federal mediators wade into negotiations between the U.S. West Coast longshore union and waterfront employers, but a deal will likely be reached, according to two experts on labor negotiations.

“This is a sign of the union saying, ‘We want to be reasonable. We want to see if we can get an outside party to help us reach a middle ground,’ ” Steve Cabot, a veteran labor management-related expert and chairman of the Cabot Institute for Labor Relations, told JOC.com on Tuesday.

There also might be an element of public relations in the International Longshore and Warehouse Union’s agreeing to the Federal Mediation and Conciliation Service assuming a formal role in their stalled negotiations with the Pacific Maritime Association, said Cabot, who has represented employers in labor talks for nearly 50 years. If a deal can’t be worked out, the union can at least say it agreed to involve a third-party so the blame doesn’t fall entirely on their shoulders, he said. Still, he believes the ILWU’s desire to reach a deal is the real driver of its decision to invite the FMCS.

Shippers welcomed the ILWU’s decision this week to agree to mediation after a few weeks of thinking about it  — West Coast waterfront employers made the request on Dec. 22 — seeing it as a potential breakthrough in negotiations that have lasted eight months and wreaked havoc on ocean container supply chains. The PMA said ILWU slowdowns are exacerbating congestion at all major U.S. ports. The union rejects the accusations, blaming carriers for the chassis dislocation that is among several factors causing the congestion.

Michael Belzer, an expert on U.S. labor and an associate professor of economics at Wayne State University, is also optimistic that federal mediators will help the two sides reach a deal. He said both sides are strong and knowledgeable, increasing the likelihood they’ll be able to trade concessions and ultimately reach a deal. If both sides are not equally balanced in their bargaining power and aptitude, the stronger side generally tries to force a solution, leading to “all-out” conflict, Belzer told JOC.com.

“That is why a power balance is such a good thing. It gives both sides an opportunity to duke it out mano a mano and choose what they will trade on,” he said.

Both sides also have much to lose if they don’t stay at the table and work out a deal, Cabot said. For example, if employers declared an impasse and implemented their last offer to the union, that would equate to waging outright war on the ILWU, a scenario the PMA is strongly looking to avoid, he believes.

The ILWU isn’t looking for an all-out confrontation either, as a lockout or strike could spur more shippers to permanently reroute cargo away from the West Coast, costing them work hours, and could, in the extreme case, provoke a political backlash in Washington.

Even so, shippers watching from the sidelines shouldn’t expect federal mediators to save the day in short order. Federal mediation is a slow process involving the team — to be headed by senior mediator Deputy Director Scot Beckenbaugh — shuttling going back and forth between the two sides to determine the bargaining range, Belzer said.

Although each negotiation is unique, the FMCS generally hears both sides and implements ground rules for negotiations, working with each side to focus on interest rather than negotiations positions. In a brief statement, the FMCS said it would begin proceeding “as soon as possible.”

“These federal mediators are very disciplined,” Belzer said. “They are not trying to outsmart one side or force a solution. They will work both sides to see the places where solutions could be found,” he said.

Although the FMCS has had a success record of between 84 percent and 87 percent during the last decade, mediators’ ability to get both sides to a deal is 47 percent when the contract covered more than 1,000 workers. There are nearly 14,000 ILWU members.

And there have been some conspicuous failures in recent years, said Jock O’Connnell, an international trade economist.

The FMCS was unable to negotiate an agreement between the National Football League and the players’ union in 2011, and in negotiations between the National Hockey League and the players’ union in 2012. Even when the FMCS helps parties reach a deal, it can take a long time, as in the case of the NFL and its referee’s union taking four months of federal mediation aid before ending the lockout.

With disagreements over the jurisdiction of chassis maintenance and repair being a key obstacle to reaching a deal, the FMCS will be particularly challenged because the International Association of Machinists, which has historically performed that work at some terminals, won’t be at the table. Shipping lines have sold most of their chassis to equipment leasing companies, which are not PMA members, meaning they can’t bargain with something they don’t control.

“There is some hope (among the industry) that (the FMCS) will come in and get this wrapped up in a week so the ports can get back to some semblance of normalcy,” O’Connnell said. “It’s a legitimate hope. But that’s what it is — hope.”

Carriers Announce Suspension of Port Congestion Surcharge

Carriers Announce Suspension of Port Congestion Surcharge

For the second time, six ocean carriers have announced they will suspend the Port Congestion Surcharge until further notice.  APL, CMA CGM, Cosco, NYK Lines, OOCL and Yang Ming have all indicated they will temporarily suspend the previously re-instated congestion surcharge.  We expect other carriers to follow and suspend the congestion surcharge as well.  Carriers chose to suspend the first congestion surcharge due to pressure from shippers and scrutiny from the Federal Maritime Commission.  WWL will continue to monitor for new developments and advise once more information is available.  If you have any questions or concerns, please contact your local WWL account manager.

 

Port squeeze threatens U.S. retailers’ holiday stocking plans -Reuters

Port squeeze threatens U.S. retailers’ holiday stocking plans -Reuters
11:50am EDT
By Nandita Bose and Lisa Baertlein

CNP

Please take note of the latest information we received today, via a report by Reuters News Bureau. Much of what is said is reiterated from previous reports , but it seems evident that the ILWU unresolved contract with the Pacific Maritime Association is beginning to have more of an effect on the situation as well.

 

Port squeeze threatens U.S. retailers’ holiday stocking plans -Reuters

11:50am EDT
By Nandita Bose and Lisa Baertlein
CHICAGO/LOS ANGELES (Reuters) – A shortage of transportation equipment and possible labor disruptions at the Los Angeles/Long Beach port complex, ​the nation’s busiest, is delaying shipping containers for up to three weeks, threatening timely delivery to retailers for the holiday season.
The delays are affecting retailers including JC Penney Co, Macy’s Inc,  Kohl’s Corp, Nordstrom Inc, American Eagle, Ralph Lauren and Carter’s, according to three people with direct knowledge of the situation. Retail giant Wal-mart Stores Inc, recently diverted 300 shipment containers to Oakland to avoid the congestion, one person said. Wal-Mart declined comment.
The problem stems from a shortage of trucking equipment, called chassis, but the National Retail Federation in a statement said protracted labor negotiations were an issue, too. The International Longshore and Warehouse Union declined comment on whether talks were having an effect.
Most retailers acknowledged the delays at the key ports for shipments from Asia, but said they did not anticipate product shortages during the holidays. Even so, any delay can derail a finely calibrated just-in-time inventory control system, making it costlier for retailers to put merchandise on the shelves.
“It’s a domino effect,” said Nate Herman, vice president of international trade at the American Apparel and Footwear Association. “When there is an interruption, things degenerate quickly.”
With major port contracts up for renewal this year, retailers including Wal-Mart ordered early and prompted a surge of deliveries in June and July, port statistics show. But significant volume still arrived during the traditional August-October period that precedes the November-January holiday shopping season.
“There will be a scramble to restock shelves this holiday season,” said Mark Hirzel, president of the Los Angeles Customs Brokers and Freight Forwarders Association. “The delays are running into two to three weeks.”
Cargo containers typically take two to three days to move out of the port.

IDLE CONTAINERS
A freight forwarder who spoke to Reuters on condition of anonymity said holiday merchandise for retailers like JC Penney, Macy’s, Kohl’s and Nordstrom that landed at the Los Angeles port two weeks ago still has not cleared the port.
An apparel importer who declined to be named said American Eagle, Ralph Lauren and Carter’s shipments from Bangladesh have been stuck for over two weeks. “We simply don’t know when these shipments will move out,” the source said.
An American Eagle spokeswoman declined comment on the delays.
JC Penney and Macy’s both said they did not anticipate significant delay-related issues. A Nordstrom spokeswoman said the company was contacting vendors for information.
Wal-Mart, Kohl’s, Ralph Lauren and Carter’s did not respond to requests seeking comment.

DISPUTE ABOUT CAUSES
Outside the gates of Los Angeles/Long Beach Seaport on busy days, trucks stand in mile-long queues, even as stacks of unmoved containers wait for pickup at a complex that handles 40 percent of U.S. container cargo. ​​The Port of New York and New Jersey is also affected, but to a lesser extent.
Val Noronha, president of Digital Geographic Group, said the company’s GPS tracking data showed a third of trucks took more than two hours to enter and leave the port, compared to about one fifth taking that long in June of 2010.
Geoffrey Hanna, vice president of textile importer Henry W. Peabody & Co., said some truckers have refused to go to the ports because of long wait times. It took his firm more than two weeks to get a recent shipment out, Hanna said.
The disruptions stem from the move by shipping lines, which struggled during the recession, to sell container trailers and other non-core assets to equipment leasing companies, port sources and outside experts said. The change sent roughly 8,000 truckers that serve the port each day scrambling to find chassis.
The backlog of containers is creating extra work. Statistics from the Pacific Maritime Association, which represents 29 ports along the West Coast, show hours paid to terminal workers jumped 24 percent this September over the same month last year. Last month, 750,850 inbound containers arrived at the Los Angeles/Long Beach complex, up almost 11 percent from a year ago, the port statistics show.
Several retailers and importers are considering alternatives such as Houston or East Coast ports, Hirzel of Los Angeles Customs Brokers and Freight Forwarders Association said.
“It will cost more and take longer but they want certainty,” he said. “In this situation, there is value in certainty.”

 

LA/LGB Port Situation

Please note the latest information as published in the Journal of Commerce. LA/LB still a mess with no end in sight!

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 earlier this year 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.

LA PORT SITUATION

”   Please note the latest information as published in the Journal of Commerce. LA/LB still a mess with no end in sight!

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 earlier this year 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.  “