Marisol International News Bulletin; Carriers Temporarily Omit Oakland Port Call

Carriers Temporarily Omit Oakland Port Call

Due to severe congestion and unresolved labor issues at the Port of Oakland, select carriers have announced they will omit the Oakland port call until further notice. According to reports, 10 to 15 ships are anchored in the San Francisco Bay daily awaiting berths at Oakland marine terminals. As a result, carriers have amended vessel schedules in an effort to relieve congestion.

UASC stated it will temporarily omit the Port of Oakland on all future AWS1, AWS2 and AWS3 vessels until further notice. Import cargo already in possession with an Oakland port of discharge for the AWS1, AWS2 and AWS3 vessels will be delivered to Oakland. UASC will continue to call the Port of Oakland for AWS4 vessels. Oakland cargo will only be accepted to and from: Fuzhou, Xiamen, Nansha, Hong Kong and Yantian.

Additionally, Hapag-Lloyd notified customers earlier this week that the Oakland port call will be temporarily suspended for its WAN service. The first vessel not to call at the Port of Oakland will be the Cap Pasado V.920N/924S, with an ETA into Oakland of February 6, 2015. All Oakland import cargo currently loaded on this vessel will be discharged in Vancouver, BC to connect to a feeder with an ETA into Oakland of February 10, 2015. It has been reported that Hamburg Sϋd, Maersk Line and ANL-USL will also omit Oakland port calls. Due to vessel sharing agreements, the above stated changes will impact additional ocean carriers’ vessel schedules as well.

Furthermore, the ILWU will hold their monthly Union Meeting today. As a result, there will not be any work during 2nd shift within the Port of Oakland. The in-gate will close at 3 pm to ensure all trucks inside the terminal will be serviced.

Marisol International / Wwl will continue to provide important vessel schedule changes through news bulletins. If you have any questions or concerns, please contact your local Marisol / Wwl International account manager.

ILWU-PMA trade painful blows as talks reach eight-month mark

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.

PMA statement ‘ominous’ in pointing to possible lockout

Could the industry be approaching a point of no return in West Coast longshore talks?

The acrimony between employers and the International Longshore and Warehouse Union has only grown worse since a federal mediator was called in on Jan. 5 with high hopes that the agency practiced in bringing warring sides to the table would achieve a settlement after almost nine months of negotiations.

Yet even the parties are saying that since the mediator arrived no progress has taken place.  “Since the mediator joined the talks, no further agreements have been reached and ILWU work slowdowns have continued to the point where many terminals are in peril of complete gridlock,” the Pacific Maritime Association said in a statement released late on Monday.

But it’s not just that nothing has improved since the mediator joined the talks. The PMA seemed to be saying that the mediator’s presence hasn’t worked and that additional steps to achieve a resolution may be necessary. “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 employer group said.

That statement, a distinct change in the language the PMA has used in prior statements, seemed to point to something new afoot. Some believe that something is a lockout, where the union is locked out of terminals by the employers are all cargo movements come to a complete stop.

“I think that their last sentence was a very ominous one and a lockout is where it’s pointing to,” said Jock O’Connell, an international trade economist affiliated with Beacon Economics in Los Angeles, who tweeted to that effect on Monday. “Why else would they say that they are alerting port authorities? Who was this press release addressed to, the media, the union, the federal mediators, or the port authorities, that they could expect some summary action very quickly?”

Many in the industry recall the ten-day lockout in the fall of 2002, a rude awakening which led thousands of importers and exporters to diversify their international supply chains to ports in Canada and the East and Gulf coasts to avoid over-reliance on ports on the West Coast.

Calls to West Coast port authorities could not confirm what if anything the PMA has communicated to the port authorities.

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.