Tuesday, July 1, 2014

Shipping Groups on Alert as Import and Export Freight Numbers Under Threat from Labour Negotiations

As Usual Nobody Really Knows the Damage a West Coast Dock Dispute Could Cause the American Economy
Shipping News Feature

US – So, here we go again, the analysts and experts speaking volumes and saying little as the spectre of a West Coast port strike looms, or doesn’t dependant on who you read. The facts are simply that a contract between the International Longshore and Warehouse Union (ILWU) and the employers representative group, the Pacific Maritime Association (PMA), expired yesterday (June 30) meaning from today, all freight passing through the ports responsible for around 35% of all US imports, will be at the whim of union workers.

It is customary to wheel out the scare stories at times like this, and it is true that historically these negotiations can break down resulting in closures such as the one in 2012 which closed parts of the Ports of Long Beach and Los Angeles for several days, but the $1 billion per day this is said to have cost is a figure that seems curiously rounded considering that the ships involved simply diverted to other local ports.

This time it’s $2.5 billion a day that is the sum which is being bandied about in the trade press and beyond as the ‘cost to the nation’ but this assumes complete closure of all thirty West Coast ports by a major strike, something which hopefully will not occur. There is however some history to these affairs and there have been some acrimonious disputes in the past but usually matters are resolved within a few weeks of the end of cessation of any agreement.

The reason for this is simply that unions such as the ILWU naturally wish to argue from a position of strength, something they have as soon as formal agreements cease, as on this occasion. Public opinion soon turns on any outfit that the public perceives as holding the country to ransom. The employers will try to reduce some of the fixed costs which they incur whilst the union seeks the normal increases and improvements for its members.

If things do take a turn for the worse there is always the option of Presidential intervention via the Taft Hartley act but the main financial damage these affairs engender are caused, not by all out strikes, but by the corrosive slowdowns which normally accompany the negotiations, some encouraged by the union, some simply because pockets of workers feel they are not getting enough from their representatives or management creating a ‘work to rule’ environment.

With over 20,000 workers involved, a third of whom are casual ‘walk-ons’ even a partial a withdrawal of labour can of course be damaging, as can continuing practices the management say are outdated such as the ‘8 hour rule’ and container royalty payments seen in the 2012 East Coast disputes. This time retention of health care benefits is a sticking point as is the unions primacy over what at first sight are not dock handling related activities including computer operations, something paralleled by UK unions in ports such as London Gateway. This change in roles is a slow, painful one in the US, whilst many of the old outdated practices across the Atlantic were swept away by the repeal of the Dock Labour Act.

The ILWU have been negotiating more besides the renewal of the new Longshore & Clerks Contract with its Safety Sub-Committee demanding more stringent regulations in the ‘Safety Code’, a 168-page document formally known as the ILWU-PMA Pacific Coast Marine Safety Code citing the bitter row the union has been having with ICTSI in Portland.

A best case scenario therefore would be a full resolution by mid-July with minimal disruption to services, we can only wait to see what exactly each side is prepared to settle for, but if either is in the mood for a drawn out dispute the cost to America could indeed be extremely damaging even if not a costly as the naysayers would have us believe.