From SCDigest's On-Target e-Magazine
- Nov. 25, 2014 -
Global Supply Chain News: Mess at West Coast ports Continues, with No Labor Contract in Sight, Raising Fears of Strike or Lockout
ILWU Takes 12-Day Break from Negotiations, as Amicable Tone Finally Disappears After Months of Talks
SCDigest Editorial Staff
The general mess at US West Coast ports, notably Los Angeles and Long Beach but others as well, continues on this week, with delays and backlogs growing; meanwhile, the International Longshore and Warehouse Union (ILWU) recently said it was done with negotiations on a new contract for awhile, and would come back to the table Dec. 2, raising fears West Coast ports may yet see a strike.
The Pacific Maritime Association (PMA), which represents West Coast ports and terminals, has accused the ILWU of engaging in a work slowdown at the ports, usually achieved by not sending the needed number of workers in some areas to handle the volumes of containers. The ILWU has denied the charge, but the backup of ships and containers is pretty persuasive evidence.
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So for now, it's wait until Dec. 2 to see how negotiations proceed after a 12-day timeout - while congestion and chaos continue on in several West Coast ports.
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There were a dozen container ships anchored outside the congested ports of LA and Long Beach this past Sunday, matching a two-year high, the ports' Marine Exchange reported, bringing back memories of the even larger back-ups of ships outside the ports in peak season in 2005.
The alleged work slowdown has combined with higher than expected container volumes and problems with chassis management to create a sort of perfect storm in LA-Long Beach, as consumer goods companies and retailers scramble to get goods to DCs and shelves in time to meet Christmas merchandise needs.
The Journal of Commerce also reports that somehow the delays are pushing up trucking costs coming out of California, as trucking companies know they have shippers in a weak position given the delays getting containers off the ship and on to drayage trucks to move the freight away from the terminals.
The JOC says that for regular van freight, the average spot market rate from Los Angeles to Phoenix was $3.11 per mile in the week ending Nov. 15, versus he average DAT dry van spot rate in the multi-state Western region of $2.40 per mile, with even that still well above the $2.02 per mile national average posted by DAT.
Rates have also been elevated carrying freight to other distribution hubs such as Denver and Dallas as well.
In additional to walking away from negotiations for 12 days starting last week, the ILWU has also resisted calls from the PMA to sign a contract extension. Instead, the Longshoremen are working without a contract, because by signing an extension they could be forced into federally mediated arbitration hearings.
To top it all off, drivers for three drayage companies organized a short strike last week in protest at being categorized as contractors, not full-time employees of the firms. The drivers went back to work Nov. 21, but this issue of contract employees changing classification - so they can be unionized - is one of the Teamsters' top overall priorities.
While the talks have obviously now dragged on for months, until recently, the atmosphere was amicable, with neither side offering criticisms nor waging media battles against the other.
But that has started to change in recent weeks. After a PMA spokesman began making the charge of intentional work slowdowns by the ILWU, a union official shot back about what it called the PMA's "deceitful media tactics” designed to blame the ILWU for brutal congestion at West Coast ports.
(Global Supply Chain Article Continued Below)
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Combine that with the union's 12 day break from real negotiations and many are now worried that a strike or lockout cold be on the horizon. Of course, it was a lockout by the PMA in 2002 that caused the West Coast ports to come to a virtual standstill for 10 days, a situation that only ended when President George W. Bush invoked the Taft-Hartley Act, the ports went back into operation, and the negotiations continued until a new contract was signed.
