June 12th, 2014
ILWU, employers say US West Coast contract negotiations continue
The International Longshore and Warehouse Union and Pacific Maritime Association yesterday issued a joint release saying the contract negotiations that began on May 12 are continuing without interruption.
“Both parties remain at the table and are working to reach agreement on a new coast-wide contract,” the ILWU and PMA stated. Their goal remains to achieve a tentative contract by July 1.
The announcement, though brief, is considered a positive sign because the parties rarely say anything in advance of the contract deadline.
Nov. 16th, 2014
FMC’s Cordero questions port congestion surcharges
Federal Maritime Commission Chairman Mario Cordero said ocean carriers’ West Coast port congestion surcharges shouldn’t apply to cargo already in transit, and that the FMC will examine whether there’s a “solid basis” for the charges.
“For us, the $64,000 question is, ‘What is the trigger? What’s the basis that will allow them to charge a surcharge?” Cordero told JOC.com.
“That’s the threshold question. That’s the interesting question we at the FMC have to look into. Our staff is looking into whether there’s a trigger mechanism that is legitimate to even apply the surcharges,” he said.
Cordero, a former Long Beach port commissioner, said he’s not convinced that carriers’ citing of “labor unrest” is specific enough to justify hefty congestion surcharges that most trans-Pacific carriers filed months ago and activated Monday.
The FMC late Monday posted a notice on its website advising that the surcharges “must be clear and definite as to the implementation and termination of the surcharge based upon specific criteria related to ‘labor unrest.’”
The notice expanded on a a May 29 FMC advisory stating that surcharges would apply only to disruptions that happened after a shipper tendered its cargo to the carrier.
“The surcharges that carriers have announced do not apply, in our view, to cargo that’s on the water already, much less cargo that’s already in the ports,” Cordero told JOC.com. “If the cargo is was already in transit, the surcharge would not be applicable.”
But he said the fundamental question is whether carriers have met FMC requirements for “clear and definite” tariff or service contract provisions for the imposition of a surcharge. Without a clearly defined trigger mechanism, imposition of surcharges would be “rather chaotic,” he said.
Cordero said the current surcharges appear to be based on carriers’ “observations or findings that there is labor unrest or disruption or slowdowns.” He said he has seen “no evidence” that this is the main reason for port delays. "Labor's there, labor's working, there is no stoppage," he said.
Most trans-Pacific carriers filed required 30-day notice of possible congestion surcharges last by May, more than a month before the July 1 expiration of the West Coast longshore labor contract between the Pacific Maritime Association and the International Longshore and Warehouse Union.
With delays worsening and the PMA and ILWU still at loggerheads, several carriers last week announced that they would activate the surcharges for imports arriving in port and exports arriving at terminal gates on or after Monday.
Angry shippers have deluged the FMC with complaints. Cordero said he spoke Monday with a Texas shipper who asked how carriers could suddenly levy a congestion surcharge for containers stuck inside a gridlocked port terminal.
Carriers contend they met the 30-day notice requirement for imposing new charges when they filed the potential surcharges months ago, and that they can activate the charges immediately. Cordero said that’s an issue that merits FMC scrutiny.
Shippers also have complained about the amounts of the surcharges, which in many cases are more than half the basic per-container rate under service contracts.
Cordero said he didn’t want to prejudge whether the surcharge levels are reasonable, and said that’s a secondary question. The primary issue, he emphasized, is whether the surcharges meet FMC requirements to be “clear and definite.”
Cargo interests and truckers in Los Angeles-Long Beach and other major ports, including New York-New Jersey and Virginia, have complained about demurrage bills for containers they’ve been unable to pick up on time because of congestion at terminals.
Demurrage was brought up repeatedly during four recent FMC hearing on port congestion. Cordero said the demurrage will be one of the issues FMC staff will address in its report on the hearings.
Port congestion has become a front-and-center issue for the FMC, whose mandate includes fostering an efficient, reliable ocean transportation system.
Earlier this month, Cordero spent a day at Los Angeles-Long Beach, the busiest U.S. container port gateway. He said the issue of long truck queues and slow turn times is “very real.” He said he counted 177 trucks lined up outside a terminal at 2:30 p.m.
Cordero said he stands by his previous recommendation that PierPass waive its weekday truck-gate fees, which subsidize operation of off-hour gates designed to minimize peaks in traffic flow.
His proposal has gotten little traction. However, Cordero said it might help relieve congestion at truck gates -- and that even if it doesn’t, it will spare shippers from being charged extra while their truck drivers endure slow turn times.
May 27th, 2013
In order to achieve the most compliance with the least disruption to the trade and to domestic port operations, CBP has been applying a measured and commonsense approach to Importer Security Filing (ISF or 10+2) enforcement. On July 9, 2013 CBP will begin full enforcement of ISF, and will start issuing liquidated damages against ISF importers and carriers for ISF non-compliance.
CBP may issue liquidated damages of $5,000 per violation for the submission of an inaccurate, incomplete or untimely filing. Liquidated damages in simplified terms refer to a penalty secured by a bond. If goods for which an ISF has not been filed arrive in the U.S., CBP may withhold the release or transfer of the cargo. For carrier violations of the vessel stow plan requirement, CBP may refuse to grant a permit to unlade for the merchandise. Additionally, noncompliant cargo could be subject to further inspection on arrival.
May 09th, 2014
Hapag-Lloyd at the weekend informed its customers that it will be prepared to levy what could be large congestion surcharges on shipments to and from the United States in the event that work stoppages occur during West Coast longshore contract negotiations this summer. At the same time, the largest U.S. shipper group doesn’t expect a strike or lockout at the nation’s West Coast ports but is telling members to expect picketing and even labor slowdowns.
May 11st, 2014
ILWU Negotiations to Begin May 12
Pacific Maritime Association President Jim McKenna said today the U.S. West Coast employers’ organization will begin contract negotiations with the International Longshore and Warehouse Union on May 12, an announcement that should silence calls from retailers urging an early start to negotiations.
McKenna told the JOC TPM conference in Long Beach in early March that the PMA and ILWU would begin meeting face-to-face in May. The unspoken rule in West Coast contract negotiations is that talks get underway within two months of the expiration of the existing contract and continue non-stop to, and usually through, the July 1 deadline.
Retailers, led by the National Retail Federation, immediately after the TPM announcement urged the PMA and the ILWU to begin talks as soon as possible in order to provide stability and predictability at West Coast ports this summer.
Also, the Agriculture Transportation Coalition urged the two sides to do whatever is necessary to avoid work slowdowns or work stoppages, including extending the existing contract if negotiations continue beyond July 1, as they are expected to do. When the contract expires, the "no-strike" clause in the agreement ends with it.
McKenna said today the ILWU and PMA have agreed to begin negotiations on May 12 and to work non-stop until an agreement is reached. Starting any earlier than that, however, is simply not in the cards. Any ILWU president who would agree to early negotiations recognizes that this would be the last decision he ever made as president of the union, McKenna said.
The ILWU published on its website the results of the union’s two-week caucus in March. The bare-bones analysis of the caucus includes the following issues that the union has directed its negotiating committee to address in the negotiations:
Stronger safety provisions
More secure benefits
Greater respect for ILWU jurisdiction
A reasonable approach to new technology
As the list suggests, jurisdiction will be crucial to the negotiations, given the series of jurisdictional disputes that the ILWU over the past two years has had with other waterfront unions, such as those representing electrical workers and machinists. McKenna said maintenance and repair of cargo-handling equipment and chassis fall under that category.
Conspicuously absent from the caucus report are the "Cadillac" tax in the federal Affordable Health Care Act and the proposed length of the new contract.
McKenna however said those issues will actually be front and center in the negotiations. "The health care plan needs to be addressed," he said.
Obamacare’s tax on generous health care plans, which is meant to subsidize the millions of workers in the U.S. that have little or no health coverage so they, too, have access to affordable health care, is set to begin in 2018.
On the West Coast, employers pay 100 percent of the premiums in the ILWU health care plan, and union members pay just a $1 co-pay per prescription for medicine. The PMA estimates that the new tax will cost the industry $150 million a year. Employers have indicated that a cost-sharing formula can be worked out. The ILWU, in its traditional "no-give-back" strategy, does not want to pay any taxes on its health care plan.
Longshore rank and file have such strong feelings against the Affordable Health Care Act that ILWU President Bob McEllrath, in an Aug. 29, 2013, letter to AFL-CIO President Richard Trumka, said the ILWU was leaving the umbrella labor organization in part because of the AFL-CIO’s "moderate, overly compromising policy" on national issues such as health care reform.
The health care issue also figures into the length of the contract. Recent contracts have been for six years. Retailers and other cargo interests prefer that timeline because it provides for a longer period of stability on the docks. Negotiators this year could be asked to aim for a three-year contract that does not address health care in the hope that Congress would take action before 2018 to remove the Cadillac tax.
McKenna has met in recent weeks with groups representing beneficial cargo owners and told the importers and exporters he expects contentious negotiations. However, he repeated the analysis he presented at TPM that he expects an agreement will be reached a week or two after the July 1 deadline without an employer lockout or work stoppage.
McKenna today emphasized that cargo interests should not panic if the ILWU does not agree to a new contract by July 1. "They will never resolve a contract before the current one expires," he said.
Over the years, the ILWU has leveraged missed deadlines to secure some of the most lucrative contracts in blue-collar America. According to the 2013 PMA Annual Report, dockworkers who worked at least 2,000 hours last year had the following average annual earnings: general longshoremen, $137,253; marine clerks, $154,842; and walking bosses/foremen, $213,120.
The ILWU rank and file look at the signing of a new contract before the old one expires as a sign of weakness by their negotiators. The ILWU likewise anticipates that the upcoming round of negotiations will be difficult, especially because retailers are pressuring McKenna to reach an agreement by July 1. "I don’t envy his job," ILWU spokesman Craig Merrilees said. Retailers treat McKenna and the PMA "no different than the way they treat carriers in negotiations and sweat shops in Bangladesh," Merrilees said.
June 06th, 2014
US West Coast Labor Negotiations: Frequently Asked Questions
Why is there concern about possible disruption at U.S. West Coast ports?
Negotiations for new longshore labor agreements on the West Coast, indeed at ports generally, are when the risk of disruption is at its highest. West Coast lngshoremen have in the past sought to apply pressure on management by striking or employing any of a number of slowdown tactics. The negotiations to replace the current six-year collective bargaining agreement covering dockworkers at West Coast ports, which expires on July 1, are no exception. No recent negotiation between the International Longshore and Warehouse Union and the Pacific Maritime Association, representing waterfront employers, has been free of disruption. Disruptions normally take the form of sporadic work slowdowns, with no discernible pattern. However, the 2002 negotiations were characterized by a 10-day lockout of ILWU workers by employers, who were responding to what they believed to be illegal slowdowns.
When is the risk of disruption the greatest?
The risk of disruption is greatest as negotiators get closer to the end of the current contract, which expires at midnight on June 30th, and in the days and weeks after if no agreement is reached by then, which is a distinct possibility. The ILWU is bound by a clause in its current contract barring strikes during the life of the contract, but slowdowns are harder to prevent, as the union can make an argument that it’s due to a health or safety issue. If no contract has been agreed to by the July 1 deadline — a result predicted by Pacific Maritime Association President James McKenna at the JOC’s TPM Conference in March - the parties may agree to extend the existing agreement into July, but there is no guarantee.
Is disruption a certainty?
It is likely there will be some disruption, but how much is very hard to predict. The ILWU is a famously democratic union where locals at the various ports will take matters into their own hands, engaging in job actions without the support of the union headquarters in San Francisco, if members feel the union’s leadership is compromising on issues they feel are important. However some groups and individuals are tamping down expectations for disruption. The National Industrial Transportation League told its members not to expect a strike or lockout but to anticipate picketing and even labor slowdowns. Given the national economic impact from a work stoppage, the White House would force the ports to reopen within a few days using a Taft-Hartley injunction, which President George W. Bush used to re-open the ports in 2002, former APL CEO Ron Widdows told the JOC’s TPM conference in March. However others see a quick Taft-Hartley injunction as less likely. Agriculture Transportation Coalition Executive Director Peter Friedmann said Obama would be hesitant to invoke Taft-Hartley, which is seen as an an-anti union tool, since he is a “close friend of organized labor.” When they began negotiations on May 12 the PMA and ILWU issued a joint statement that said “both sides said they expect cargo to keep moving until an agreement is reached.” PMA president James McKenna told the TPM conference that a contract will be reached without a strike or lockout, though the possibility for slowdowns or other forms of disruption remains.
What ports do the negotiations cover?
The negotiations cover 29 U.S. West Coast ports, including all the major West Coast container ports — Los Angeles, Long Beach, Oakland, Portland, Seattle and Tacoma. It does not cover ports in Canada or those on the U.S. East and Gulf coasts, the main reason why shippers are seeking refuge at those ports.
Are shippers diverting or accelerating cargo shipments to avoid the U.S. West Coast. What are shippers’ options?
Yes. Shippers are clearly diverting and accelerating shipments to avoid potential impact from the negotiations. They have options, but by late May time was running out given the necessary multi-week lead times on shipments from Asia. Shippers have moved up orders, asked customers to take on more inventory, and routed cargo through ports in Canada and the U.S. East and Gulf Coasts. Two-thirds of the 221 shippers that responded to a May 12-14 JOC survey said they had plans to divert and of those, 73 percent said they will ship through East or Gulf Coast ports, 25 percent said they would ship through Canadian ports and 2 percent through Mexico. Carriers say all-water services from Asia to the U.S. East Coast have been full, and freight rates out of Shanghai as tracked by the SCFI as of May 15 were up 5.2 percent to the East Coast versus the same date last year but were down 4.5 percent to the West Coast. A survey by the investment research firm Wolfe Research found much the same thing.
What will be the duration of the new West Coast longshore contract?
The six-year duration was introduced in 2002 following the 10-day shutdown and was repeated in 2008. Prior to that contracts had lasted three years. Shippers, carriers and other industry players prefer six-year agreements because they mean longer periods of labor peace. But the union is seeking a three-year contract this time. At the JOC’s TPM conference in March, PMA President James McKenna indicated that negotiators may decide to postpone the issue of who — dockworkers or employers — must pay for an estimated $150 million per year Obamacare tax on the union’s premium health care plan under which employers pay 100 percent of premiums in the ILWU health and dental care plan for members and their families, and union members pay just a $1 co-pay per prescription for medicine. Such “Cadillac” plans are subject to tax under Obamacare. Employers have indicated that a cost-sharing formula can be worked out, while the ILWU, in its traditional “no-give-back” strategy, does not want to pay any taxes on its health care plan. Since the tax takes effect in 2018, some have the idea that by then Congress will change Obamacare to eliminate the tax. If not, the union and employers can revive the issue then as part of a separate negotiation.
What are other potential flashpoints?
Jurisdiction is a big one. With union jobs in general in decline, unions are fighting it out among themselves over who will represent the remaining workers. The West Coast waterfront is no exception. At several terminals along the coast non-ILWU workers represented by unions like the International Association of Machinists and the International Brotherhood of Electrical Workers must co-exist with the ILWU, which would prefer to represent all workers inside marine terminals. But the ILWU is not necessarily in the best position to represent those workers. The spread of technology and automation threatens ILWU jurisdiction because maintaining the sophisticated cargo-handling equipment requires specialized skills that the mechanics and electricians unions encourage by putting their members through rigorous educational and apprenticeship programs. Last year the ILWU withdrew from the AFL-CIO, complaining that the umbrella labor organization was not supporting it in jurisdictional disputes with other unions. The ILWU still has bad memories of losing a jurisdictional battle in the early 1990s to unload ships at a steel plant in Northern California; if there is a core longshore function, it’s working ships, and that work is done by the Operating Engineers union.
How much do West Coast longshoremen earn?
ILWU workers receive a compensation package that is “among the most lucrative among all blue-collar workers in the United States,” according to the PMA. Full-time workers earn an average of $142,000 annually in wages, along with a non-wage benefits package costing more than $82,000 per active worker per year. Pay ranges depend on the job, with regular longshoremen earning less than clerks and both of them earning less than foremen. According to the 2013 Pacific Maritime Association Annual Report, most of the 9,985 “Class A” longshoremen working that year, which comprised those who worked 2,000 or more total hours, earned roughly $137,000 per year, though many earned less and a few of the highest paid longshoremen, those who worked an average of more than 50 hours per week, earned over $200,000. Most clerks earned roughly $147,000, while the highest-paid earned well over $200,000 per year. Walking bosses, or foremen, are the highest-paid ILWU workers, many of them earning well over $200,000 and some more than $300,000. Nearly 13,600 ILWU workers are employed at West Coast ports. In 2013, the total payroll for the nearly 13,600 ILWU members was roughly $1.4 billion. For detail on ILWU worker incomes, see this display.
Are wages expected to be a sticking point in the negotiations?
Probably not. Total longshore earnings, when overtime and skill-differential wages are included, are already among the highest in blue-collar America, so negotiators for both sides normally agree to modest annual hourly increases in the base wage.
What options do negotiators have for jurisdictional issues?
Jurisdiction can be tricky because the PMA as an employer group does not control 100 percent of the jbs on the waterfront. For example, the IBEW or IAM unions have contracts with individual employers that date back many years. Therefore the PMA can not arbitrarily give that jurisdiction to the ILWU. Jurisdictional issues can arise outside of the years when a contract is negotiated, such as when a terminal changes hands and the new owner has a contract with a different union. Appeals are then lodged through the established grievance procedures, or lawsuits may ensue. Jurisdictional issues are expected to intensify in coming years because automation eliminates some jobs but also creates new jobs calling for new skills.
How is automation being handled?
The 2002 contract gave employers the right to use computer technology, and the 2008 contract gave employers the right to introduce automated cargo-handling equipment. The ILWU normally uses the grievance machinery to challenge the new technology, but when the process runs its course, the employer is free to move forward with the technology. As a practical matter, the individual employers normally have many meetings with the ILWU locals and agree upon manning, use of the new equipment and related issues. The goal of employers is to achieve “buy-in” from the locals so that the expensive machinery is introduced smoothly, without work stoppages.
June 09th, 2014
New ISF Enforcement Strategy Implemented by CBP
U.S. Customs and Border Protection (CBP) has announced that they are taking another step in its measured ISF enforcement strategy. There are still many shipment arriving without the Importer Security Filing (ISF) matched to the manifest for ocean shipments arriving at United States ports of entry. CBP needs the advance data to properly assess the security risks of the arriving cargo. While some penalty cases were issued when CBP began its first measured enforcement up until the past May 13, CBP has not been issuing penalty cases for liquidated damages for ISF violations for some time. They have been holding cargo for the missing data in many ports.
Under the new measured enforcement that went into effect on May 13, 2014, CBP at the local Ports can begin actions for those shipments that do not have the ISF matched to the bill of lading on a manifest before the vessel arrives in most Ports. While the law clearly calls for the ISF to be filed before the vessel is loaded, CBP will, for now, require the data be received and matched generally 48 hours before the vessel arrives for ISF violation review. There will be different time frames for voyages that have a less than 48 hours time frames from the time of departure to the actual arrival. The Ports with those challenges will set reasonable time frames for the data to be received to do proper security review.
The new ISF enforcement strategy will provide for a standard approach to conduct analysis into non-complaint ISF filings, while still allowing for local Port discretion. Under the new measured enforcement, CBP at the local Ports can take actions that can include holding freight as well as issuing liquidated damage claims for those shipments that are significantly late or have no ISF matched to the bill of lading. Ports can still decide to hold cargo rather than issue liquidated damages. Others may use a combination of holds and actions.
The new ISF enforcement program will require CBP to do outreach with those that are failing to properly file their ISF’s before a penalty is issued. CBP has initiated a 3-strikes rule for all Ports. When a shipment arrives without the required ISF, CBP may reach out to the importers to find out what the problem was to work with the importer to correct the problem for future shipments. In its outreach, CBP may determine that treatment as a violation is in order and will issue a “First Strike” record for that importer. An importer is allowed 3 strikes before a liquidated damages case can be issued.
CBP has begun the new ISF enforcement regime by focusing on the most severe violations, such as those ISF’s that are significantly late or not filed at all. CBP is giving the Ports great leeway in their review, but intends that significantly late filings be considered to be those that, with the failure of an ISF filing, had negatively impacted CBP’s ability to assess risk in imported cargo.
The LACBFFA sent out a note on May 19 that, based on the guidance received, there will be no changes in the ISF enforcement process now in effect at the Ports of Los Angeles and Long Beach. However CBP in Los Angeles may also send notices that may lead to liquidated damage cases.