Talks Continue at East, Gulf Ports; Southern Calif. Clearing Backlog

This story appears in the Dec. 17 print edition of Transport Topics.

With a potential strike less than two weeks away, contract talks between the union representing East and Gulf Coast dock workers and management continued last week without an agreement.

Across the country, Southern California truckers were still clearing the cargo backlog left by a recently ended walkout.

Working against a Dec. 29 contract expiration, the International Longshoremen’s Association met with management negotiators from the United States Maritime Alliance for three days last week. While neither side issued a formal comment afterward, talks are resuming this week to discuss so-called container royalties paid to ILA members, multiple sources said.

A strike at ports ranging from Houston to Canada would be the third international supply chain disruption in two months.

First, Superstorm Sandy in late October devastated New York-area freight patterns. Then on Nov. 27, tens of thousands of containers were stranded on ships and on land by an eight-day clerical workers strike at Los Angeles and Long Beach, Calif., the nation’s largest ports.

“We cannot afford to have the entire coast engage in job actions similar to what we just saw at the ports of Los Angeles and Long Beach,” said Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation trade group. “The impact to the U.S. economy as a whole would be significant.”

In total, the 15 ports where 14,500 ILA members work move about 25% more cargo annually than the combined volume at Los Angeles/Long Beach, according to statistics compiled by the American Association of Port Authorities.

Box royalties have been paid to ILA workers since the containerization grew in the 1960s. The fees have escalated since, and account for 17% of pay for someone working 2,000 hours annually, according to USMX. USMX has said it wants to cap the fees at their present level.

Contract talks began in March, and have continued on and off since then. A federal mediator had to intervene on Sept. 20 before the two sides agreed to extend the contract for 90 days. If a walkout occurs, it would be the first East and Gulf Coast stoppage in more than three decades.

Gold urged both sides to “continue to negotiate until a new deal is reached” and said the Obama administration must do everything possible to keep the ports open.

“We urged the two sides to work out a negotiated settlement and avoid the disastrous outcome that would come from port disruptions,” said Peter Gatti, executive vice president of the National Industrial Transportation League.

In Southern California, several sources indicated the cargo cleanup after the strike by a unit of the International Longshore and Warehouse Union will stretch into next year.

“It’ll take weeks to work off the backlog. The terminals will make some progress, and then they’ll stop first for Christmas and then New Year’s,” said Christopher Chase, the Port of L.A.’s business development manager.

“The terminal operators will take off the boxes as quickly as possible, and then they won’t be able to find the box you need, and this will happen for weeks,” said Robert Curry, president of drayage fleet California Cartage Co. He added that he is grateful that the strike occurred after the peak season for holiday shipping.

However, some holiday cargo still is moving, and that means the time lost right now is irreplaceable, said Sherry Hertel, sales manager of Southern Counties Express, another drayage fleet.

One Southern Counties customer normally ships containers from Los Angeles or Long Beach via rail to Memphis, Tenn., where the shoe manufacturer has a distribution center.

“They’re very concerned and right now the rails just aren’t fast enough after losing eight days from the strike,” Hertel said.

She has offered to load containers onto flatbed trailers, since chassis owners don’t want that equipment to leave the port area and move containers over the road to Memphis.

“Having more containers than usual on the docks means more areas closed to trucks than normal, and that makes it more difficult for us to move around,” Hertel said.

Spokesman Art Wong for the Port of Long Beach said congestion there was eased by cargo diversions to other ports, slower steaming by ships en route and operations that continued at three terminals that weren’t affected by the strike.

“The terminal gate situation seems to be manageable,” said Bruce Wargo, president of the PierPass program set up by terminal operators to shift some cargo to off-peak hours. He said terminal operators have added staff and opened port gates on Sunday to help clear the backlog.

Wargo also said terminal operators still haven’t acted on a request to waive the daytime cargo pickup fee in order to speed the removal of the backlog. The California Trucking Association requested the waiver of the $123 per 40-foot container fee.