Friday, February 20, 2015

Container Freight at a Standstill Again as West Coast Port Dispute Crawls Onward

Veiled Threats from Presidential Negotiator May Finally Have Some Effect
Shipping News Feature

US – Pressure is mounting on both sides in the West Coast dock labour dispute as the talks to end the crisis closed last night after a third straight day of discussions between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) with Labour Secretary Tom Perez, installed by President Obama to assist federal arbitrators, hinting that failure to agree would be cause to involve Washington. The dispute has seen a backlog of dozens of ships moored outside the 29 ports waiting to discharge freight containers mostly from Asia.

The long running row has caused an imbalance in the East Coast trade with container spot rates from Asia to the US standing at over double that for those across the other side of the country. The situation at the Port of Oakland this week gives an idea of the current position.

With January cargo volumes plunging, containerised imports down 39% against last year and exports similarly hit with a 26% drop, Oakland was one of the ports which suspended working over the long holiday weekend, February 12 to 16 to cut costs, and a backlash from the union was almost inevitable. This came in the form of a complete cessation of work yesterday (February 19) with Port of Oakland marine terminal operations at a standstill as the workforce held a union meeting, that meant no gate, yard or vessel work on the 8am to 5pm shift and then vessel operations stopped on the evening shift as well under a month-old suspension of night time activity by terminal operators.

The move would seem to be a thinly disguised response to the employers’ reluctance to pay double rates to workers for the holiday, plus the five largest ports cutting night shifts and weekend working at a time when there is already little or no cooperation between the two parties. The longshoremen’s meeting is a monthly affair but one typically held at night, not during what is usually the time of peak activity. All work on the twelve vessels at berth was suspended prompting Port Maritime Director John Driscoll to comment:

"With a decline in productivity and a breakdown in vessel schedules at all US West Coast ports, cargo volumes are far from normal. The decision not to work is damaging to shippers who rely on the Port of Oakland to move their cargo, and to the thousands of people who depend on the Port for their livelihood. Disruptions such as this one cripple our ability to support global trade and the economy of the Bay Area."

As to the broader picture much will depend on the reaction of Secretary Perez, although he has been quoted in some media saying that if things are not settled today then it will be off to Washington. What exactly happens then remains open to question, when in 2002, President George W. Bush invoked the 1947 Taft-Hartley Act resulting in Court order for a return to work, it was at the time of a full blown strike.

The situation now has a workforce in place, but it seems only when it suits either side to have one, the union inevitably holds the whip hand generally in this situation and seems to be already trying to move the goalposts for these and any subsequent negotiations by demanding a unilateral right to veto any West Coast arbitrator at the cessation of a contract period, a move the PMA sees as blackmail as it would influence the behaviour of an individual charged with settling employment disputes.

Whilst this tawdry affair drags seemingly ever onward the long term damage done to the West Coast ports can only be guessed at, with an estimated 70% of Asian trade coming through the 29 locations, even an immediate settlement will leave exporters and importers in the mood to use alternative methods and locations if they are competitively priced.

Photo: Secretary Tom Perez, with a reputation as often proving a supporter of the working man.