Month: November 2012

LA-Long Beach Port Strike Now Entering 4th Day

We are now entering the 4th day since the clerical workers began striking at the ports of Los Angeles and Long Beach. The longshoremen continue to honor the strike, keeping most of the terminals shut down. There are three terminals (PIER A, PCT and B-136) in Long Beach that are open. These terminals are open because they do not employ OCU clerical workers.

We have yet to see many vessels begin to divert from Los Angeles/Long Beach. However with a number of vessels set to arrive this weekend and already arrived vessels continuing to remain unworked on, we may see carriers forced to divert vessels in the coming week. Carriers are giving us daily status reports. Most are taking a wait and see approach. This may change at a moments notice. Importers who are expecting their cargo to arrive in the coming weeks should continue to brace for long delays.

Importers with new bookings for containers moving via rail to inland locations may want to consider carrier services that transit via Canada (via Vancouver or Prince Rupert). Some inland destinations that have carrier service through Canada include Chicago, Cleveland, Memphis, Minneapolis, Detroit. Please contact us if you want to inquire into specific inland rail destinations not listed here.

-Jimmy Ting

Labor Dispute at Los Angeles & Long Beach Ports Threatens to Disrupt Ocean Shipments Throughout the United States

The West Coast port clerical workers have been working without a contract since their previous contract expired over two years ago (June 30, 2010).  Negotiations broke down earlier this month. Clerical workers went on strike at APM Terminals in Los Angeles on Tuesday, November 27th. The strike spread to the other terminals in Los Angeles & Long Beach on Wednesday, November 28th. Longshoremen working at these terminals have honored the picket lines, effectively shutting down the ports of Los Angeles & Long Beach.

Clerical workers went on strike for one day at the port of Oakland last Tuesday (November 20, 2012), shutting down the port for a single day. They returned back to work the following day. However the strike in Los Angeles & Long Beach seems to be more than just a one day demonstration. Through today, the ports of Los Angeles & Long Beach are still shut down.

*** Special Alert (as of 11:50am, Nov.29, 2012): It does seem that a few terminals are open (PIER A, PCT and B-136). All other terminals are closed. How long this continues remains to be seen. ***

The issue that seems to be at the crux of the labor dispute is not wages and benefits (which the OCU agrees is generous). At issue are 51 jobs that the OCU feels have been outsourced to other countries. The Los Angeles / Long Beach Harbor Employers Association represents the terminal companies in their negotiations. They dispute the allegations of outsourcing of jobs, saying that the 51 jobs referred to by the union belong to workers who have retired, quit, or died in the the past three years. The fact that new hires were not made to fill these positions was a simply a matter of lack of business need for replacements. None of the work performed in the 51 jobs has been outsourced.

If you are interested in following the labor dispute in detail you can try to read both sides of the story at the following websites:

Los Angeles/Long Beach Harbor Employers Association: This website represents the viewpoint from the terminal operators who employee toe clerical workers.

Longshore & Shipping News: This is a website that seems to provide news from the perspective of the longshoremen. I couldn’t find news updates on the actual ILUW 63 OCU website.

Importers and exporters need to brace themselves for an extended work stoppage. How long the actual work stoppage continues is difficult to predict. What is apparent is that the work stoppage will impact ocean shipments throughout the United States. Containers at the port of Los Angeles/Long Beach waiting to move onto rail are effectively stuck. Vessels waiting to get worked on at the port of Los Angeles/Long Beach are sitting idle. Importers waiting for vessels to continue sailing to other ports along the West Coast (Oakland, Portland, Seattle, Tacoma), will likely see delays as most vessels call Los Angeles/Long Beach first. Cargo currently being loaded onto vessels coming to the West Coast may also find their schedule disrupted. If work stoppage continues for an extended period of time, we may even see carriers begin to divert cargo (as seen during the previous work stoppage on the West Coast ten years ago). The diversion of cargo led to significant additional charges that importers had to pay.

We should also keep in mind that the contract negotiations between the longshoremen’s union (ILA) and the East Coast & Gulf ports have not been settled yet and the pushed out deadline (December 29, 2012) is right around the corner. Importers may be faced with a situation where there is a labor dispute at both the West and East Coast ports.

-Jimmy Ting

Steamship Lines Declaring “Force Majeure” in Dealing With the Aftermath of Hurricane Sandy

New York and New Jersey are still recovering from the aftermath of Hurricane Sandy. One thing we began seeing at the end of last week as everyone began to account for the devastation, was that the steamship lines were not going to be able to dock all their vessels at the port terminals. Carriers have already begun to announce the diversion of vessels to other ports (mainly Norfolk and Baltimore). In doing so, they have also declared “Force Majeure.”

What does this mean for importers? A declaration of “Force Majeure” allows the carriers to terminate their obligations at the diversion port rather than the original port of unloading. The carriers will no longer be obligated to bring the goods to the port of New York / New Jersey. Importers will be required to complete the remainder of the transportation via their own selected method of transportation.

One thing to be aware of is that most carriers are requiring that the container and chassis equipment be returned to the diversion port. For importers who are shipping to destinations further inland, this may result in significant cost as truckers will have to provide round-trip service, returning the empty container back in Norfolk / Baltimore.

One carrier has been offering the option of barge service at a cost of ($750/40′???)from the diversion port to New York / New Jersey. However the backlog for barge service is currently one week. The on-the-water transit time for barge service is also estimated at one week. Barge service may therefore end up taking two weeks total. This may be unacceptable to many importers.

Some importers have asked whether freight insurance will cover the extra expense as a result of the declaration of “Force Majeure.” Unfortunately, freight insurance would only cover physical damage to the freight as a result of the declaration. Freight insurance will not cover the extra transportation cost.

This is another example of the risks involved in international shipping. Unfortunately, this is one risk that an importer has few, if any options of avoiding.

Wishing those affected by Hurricane Sandy a speedy recovery.

-Jimmy Ting