Zero Hedge, in their article, “Catastrophic Shutdown of America’s Supply Chain,” provides us with the visuals to understand the seriousness of the port congestion on the U.S. west coast.
Tyler Durran, Zero Hedge. “Catastrophic Shutdown Of America’s Supply Chain” www.zerohedge.com 2/12/2015. http://www.zerohedge.com/news/2015-02-12/catastrophic-shutdown-americas-supply-chain-begins-stunning-photos-west-coast-port-c (2/13/2015).
The Pacific Maritime Association has just announced that West Coast ports will be closed Thursday, Saturday, Sunday and Monday.
Karma Allen, CNBC.com. “West Coast ports shutting down… again” www.cnbc.com 2/11/2015. http://www.cnbc.com/id/102413710 (2/11/2015).
Portland’s weekend port closure may have been the last straw for Hanjin Shipping. Yesterday, in an official email, they dropped the Port of Portland as a distribution point. They didn’t cite specific reasons, but the two year ICTSI and local longshore worker dispute has been a point of contention in the past. This will be a huge economic hit to the region. The business supported over 500 jobs and produced $83 million for Oregon’s economy annually. Hanjin will continue to service Portland by air, truck and rail.
Molly Harbarger, The Oregonian/OregonLive. “Hanjin Shipping officially leaves Port of Portland, taking vast majority of port’s business with it” www.oregonlive.com 2/10/2015. http://www.oregonlive.com/business/index.ssf/2015/02/hanjin_officially_leaves_port.html (2/11/2015).
This weekend 29 ports on the U.S. West Coast were temporarily closed. They are scheduled to reopen today.
Sarah Aitchison, Puget Sound Business Journal. “West Coast ports halt activity until Monday” www.bizjournals.com 2/07/2015. http://www.bizjournals.com/pacific/news/2015/02/07/west-coast-ports-halt-activity-until-monday.html (2/9/2015).
Yesterday the Pacific Maritime Association (after nine months of negotiating and a recent contract offer) threatened to lockout West Coast dockworkers. Recent union slowdowns have caused gridlock at 29 ports on the West Coast and have had an impact on other U.S. ports as well. This lockout could occur in as soon as 5 days.
After nine months of bargaining, the Pacific Maritime Association presented a comprehensive offer that would enhance the ILWU’s impressive wage and benefits package. A summary of key points is below.
Wages would continue to rise – well into six figures for full-time workers:
- Full-time ILWU workers already earn an average of $147,000 per year, which includes a base rate of $35.68 per hour, as well as very substantial skill rates, shift premiums, guarantees, overtime, vacation and holiday pay.
- Under the PMA’s latest offer, the base rate would rise to $40.68 over five years – a 14% increase, or roughly 3% each year.
- Given the dramatic multipliers described above, average full-time wages can be expected to rise well above the current $147,000 per year.
Health care benefits would continue to be among the nation’s finest:
- ILWU workers, dependents and retirees currently receive fully employer paid health care, with no premiums, no in-network deductibles or co-pays, $1 prescriptions and 100 percent coverage of basic hospital, medical and surgical benefits.
- These benefits already cost employers $35,000 per worker per year; under the PMA offer, benefits would be fully maintained.
- A recent study by the University of Chicago ranked the cost of the ILWU plan in the nation’s top 1 percent – a trend that is likely to continue under the PMA’s latest offer.
Major recent pension upgrades would be extended:
- The current maximum ILWU pension benefit is $79,920 per year, which is more than double the maximum benefit that was available as recently as 2002.
- The PMA proposal would increase the maximum pension benefit by 11.1% to $88,800 per year.
Additional contract provisions include:
- Existing pay guarantees would be increased to 40 hours per week.
- ILWU would hold jurisdiction over maintenance and repair of truck chassis.
Further information is available at the PMA website: www.pmanet.org.
Labor negotiations continue between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU). On January 6, the Federal Mediation and Conciliation service announced it was joining the negotiations as requested by both parties who have been operating without a contract since July 1, 2014. The details of the negotiations are not readily available however the results of the dispute are significant.
According to the PMA, beginning in late October the ILWU suddenly refused to dispatch qualified crane operators to the port locations. Productivity dropped in Seattle-Tacoma and the Port of Oakland. Crane productivity is measured in containers per crane hour and this productivity plunged from an average of 27.4 to 19.1 in Seattle and from 32.1 to 23.9 for the port of Oakland. In addition to this go-slow work pace, crane operator shifts were cancelled because of absent crane operators.
Los Angeles-Long Beach which remains the busiest West Coast port handling more than 80 percent of the West Coast containers bound for its extensive intermodal rail connections has been the hardest hit. Qualified crane operators have been reduced by up to 75 percent and according to Gene Seroka, the executive director of the Port of Los Angeles 95-97 percent of the port‘s land is full of containers.
The effect of this go-slow work tactic is apparent as drayage companies wait 10-12 hours before loading 1 container. Previously a drayage driver would handle 3-4 containers in a work day. Driver waiting time, detention charges for containers and chassis along with demurrage costs caused by these delays are being billed. Delays have been averaging 2 weeks. Clients should be notified to expect these additional charges.
Some relief is expected in February and March as container volumes inbound to West Coast ports decrease to seasonal slower volumes. Cargo routed to other ports including Houston have also been delayed because of insufficient rail capacity. This congestion will not be resolved until the labor dispute is finally settled.
The Pacific Maritime Association represents shipping lines and terminal operators at 29 West Coast ports.
The International Longshore and Warehouse Union, represents 20,000 West Coast dockworkers.
Salvatore Ferrante, President
(World Maritime News)
This winter’s cargo volumes at the Port of Oakland have been record breaking. The port authority has hired firms from the private sector to work over the weekends to ensure timely throughput. The high volumes (due to overwhelmed Southern California ports, labor issues and Asian trade) should subside in the next few months.
(World Maritime News)