East Coast Port Labor Dispute 2012

East & Gulf Coast Port Strike Averted!

The leaders for the ILA and the USMX have agreed to a six-year labor contract. Both sides still need to ratify the agreement. The agreement is also contingent on agreements regarding a number of local union negotiations. Details of the actual agreement are not available.

The labor dispute was quite an ordeal, lasting for months on end. For many importers, the dispute changed the way they routed shipments as well as the timing of their orders. Our only hope is that this type of labor dispute does not become the new normal. For those who may not be aware, the contract between West Coast ports and the West Coast longshoremen’s union (ILWU) is set to expire next year, in July 2014.

-Jimmy Ting

jimmyting@great-world.com

East Coast Ports Still Waiting for a Labor Deal

We’re on to round 3 of the labor negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) representing the East Coast and Gulf ports. The negotiations were first supposed to be completed by September 30, 2012. Both sides agreed to extend negotiations to December 29, 2012. When the two sides could not come to a full agreement towards the end of last year, they made an 11th hour agreement to further extend negotiations. We are now again running close to the 11th hour of the latest extension deadline (Feburary 6, 2013). We have less than a week.

I have not heard any positive or negative news, but this uncertainty is definitely unsettling.

Hoping we will have good news to share soon!

-Jimmy Ting

jimmyting@great-world.com

East and Gulf Coast Port Strike Postponed (and hopefully averted!)

Good news that is potentially great news! The ILA and USMX have come to a tentative agreement on container royalty payments (the main sticking point preventing a new contract from being agreed upon). With this agreement, both sides have agreed to an extension of 30 days (until January 28, 2013) to complete negotiations on the remaining issues in the contract.

Neither side has published details about the agreement on the royalty payments. I am also not sure if there will be any further sticking issues that will prevent the contract from completed within the next 30 days. However I am hopeful that a final contract can now be agreed upon.

Hoping our Federal Government can also come up with an 11th hour agreement on the Fiscal Cliff crisis!

Wishing everyone a joyful and peaceful New Year!

Jimmy Ting

jimmyting@great-world.com

http://www.ilaunion.org/news.html

http://www.usmxlaborupdates.com/

Port Congestion Surcharge Update

As I’ve mentioned over the past few months, the carriers will charge a Port Congestion Surcharge (PCS) in case there is a strike at the East and Gulf Coast ports. Here is the latest update on the PCS amounts from the various carriers. Please pay particular attention to the remarks on how the PCS will be charged.

PCS (Port Congestion Surcharge)

CARRIER

TRADE

20’GP

40’GP

40’HQ

45’HQ

EFFECTIVE DATE

REMARKS

ANL

USA

$800

$1,000

$1,100

$1,266

5-Oct-12

Basis on gate-in date

APL

USA

$800

$1,000

$1,125

$1,266

30-Dec-12

Basis on gate-in date

CMA

USA

$800

$1,000

$1,100

$1,266

30-Dec-12

Basis on arrival date

COSCO

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

CSAV

USA

$800

$1,000

$1,125

n/a

6-Oct-12

Basis on gate-in date

CSCL

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

EMC

USA

$800

$1,000

$1,125

$1,266

5-Dec-12

Basis on gate-in date

HAMBURG

USA

$800

$1,000

$1,000

n/a

10-Jan-13

Basis on on-board date

HAPAG

USA

$800

$1,000

$1,125

$1,266

1-Dec-12

Basis on arrival date

HANJIN

USA

$800

$1,000

$1,125

$1,266

1-Dec-12

Basis on gate-in date

HMM

USA

$800

$1,000

$1,125

$1,266

2-Oct-12

Basis on origin cargo receipt date

KLINE

USA

$800

$1,000

$1,125

$1,266

30-Dec-12

Basis on gate-in date

MAERSK

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

MASTON

USA

$500

$500

$500

$500

10-Jan-13

Basis on gate-in date

MSC

USA

$800

$1,000

$1,125

n/a

1-Oct-12

Basis on gate-in date

NYK

USA

$1,000

$1,000

$1,000

$1,000

29-Dec-12

Basis on gate-in date

OOCL

USA

$800

$1,000

$1,125

$1,266

29-Dec-12

Basis on gate-in date

UASC

USA

$800

$1,000

$1,125

n/a

29-Dec-12

Basis on arrival date

 

We will continue to monitor the situation closely.

Jimmy Ting

jimmyting@great-world.com

East Coast and Gulf Port Labor Dispute!!!

The latest news on the labor negotiations between the United States Maritime Alliance (USMX representing the East Coast & Gulf Port terminals and carriers) and the International Longshoremen’s Association (ILA) isn’t good. The contract deadline was pushed back three months ago. However the deadline of December 29, 2012 is less than ten days away and the contract negotiations seem to be at an impasse.

The Federal Mediation and Conciliation Service (FMCS) has been trying to mediate an agreement between the two parties for months. More recently, the FMCS has been trying to get both sides to agree on another short contract extension past the December 29th date. As of today, without any agreement in site, neither side has agreed to an extension. What is interesting is that both sides are blaming the other for not getting an extension past.

If you’re interested in getting into the nitty-gritty details, you can visit the websites of the respective sides:

Both sides are claiming that the other side rejected the extension.

I’m not here to take sides on the issue. My goal is to offer advice to the shipping (importing and exporting) community on how to deal with this labor dispute. From the looks of it, there is a decent chance that we may be heading for a strike on December 29th. The ILA has already authorized a strike if no agreement is reached.

Importers with goods coming to the East Coast and Gulf ports have the most to be worried about. Carriers are making planes to reroute containers if a strike does occur. As discovered during Hurricane Sandy and few weeks ago during the 8-day strike in Los Angeles/Long Beach, the carriers have the right to declare Force Majeure in such cases. If Force Majeure is declared, carriers will have no responsibility to move the goods any further than the diversion port. In some cases, importers will have to make arrangements to move the goods from the diversion port to the final destination. In other cases, importers may have to pay additional fees to the carrier in order for the carrier to move the goods to the original final destination. If the goods have not shipped out yet, now would be time to decide on moving the goods through a West Coast port or via Canada.

Importers with goods coming to the U.S. West Coast as well as onward to inland destinations via rail will also be impacted. We are not sure if space will get tight, but there is a distinct possibility as we expect a surge in shipments in the weeks leading up to the Chinese New Year (February 10, 2013). If space does get tight, we can also expect the carriers to be bolder with their attempts to increase ocean freight shipping rates.

The carriers have almost all announced a Port Congestion Surcharge ($1000 per 40′) to be implemented on all shipments coming the United States if a labor dispute does occur. This is a bottom line impact on all importers large and small.

Let’s all cross our fingers and hope that we’ll get a resolution in the coming days before December 29th.

-Jimmy Ting

jimmyting@great-world.com

90 Day Extension on Labor Negotiations at East Coast Ports!!!

I’m sure many of you have already heard the good news that the collective bargaining agreement between the longshormen on the East Coast (ILA) and the East & Gulf coast port terminals received an 90 day extension. The original contract was set to expire on September 30, 2012. The extension allows for negotiations to continue through December 29, 2012 without any work stoppage. You can read the formal statement from the Federal Mediation and Conciliation Service on the following website: http://fmcs.gov/assets/files/Public%20Affairs/2012%20Documents/AA_USMX-ILA_Release_Draft-_9-20-12.pdf

In the meantime, the question to ask is “what does this mean for the shipping community?” Let’s start off with the obvious.

  • Anyone with shipments going to East and Gulf Coast ports can immediately start booking their containers with all-water vessels. Rates on all-water vessels were at a slight discount the last few weeks due to a decrease in demand as importers shifted their bookings to West Coast + Rail service. If you move fast enough, you might still be able to take advantage of some discounts.
  • Importers who were holding off on shipping for fear of having to pay the Port Congestion Surcharge get a temporary reprieve and should start shipping their containers immediately.

There is no crystal ball that can help determine whether a labor negotiations will succeed or fail in the next three months. The message from the FMCS seemed to imply that there was “progress” made in the negotiations. However these negotiations could easily go south. I would therefore take a worst-case scenario approach to planning. Which leads to the less obvious action importers should be taking. If importers are able to forecast in advance, try to push forward the shipping of goods to arrive prior to the end of December. From talking to various importers, this may or may not be possible for various reasons ranging from capital to production time to warehouse space. Importers do not want to be facing a situation where they have shipments on the water and a strike actually takes place on December 30, 2012.

I will continue to keep you updated.

-Jimmy Ting

jimmyting@great-world.com

Still no new contract for Longshoremen working the East Coast.

As of this afternoon, the ILA and the East Coast & Gulf ports still do not have a new contract. We are coming down to the wire with eleven days left before the current contract expires.

We have already seen importers reroute their goods to the West Coast. This rerouting on top of the October 1st holiday in China could lead to extra congestion on vessels coming to the West Coast.

We also are continuing to receive reports from truckers on the East Coast that various terminals are “slowing down” productivity. Truckers are unable to pick up as many containers at the terminals in a single day as they were prior to the “slow down”.

-Jimmy Ting

jimmyting@great-world.com

Update on East Coast Port Labor Dispute – Worker Slowdown

As of today, September 11, 2012, there is still no contract for the longshoremen on the East and Gulf ports. I have read that Federal mediators are trying to restart the contract talks.

One lesson that we learned from the 2003 West Coast strike was that the longshoremen have another tool they can use (besides a strike) to show their displeasure. In previous cases of longshoremen discontent, they have initiated “slowdowns” at the port. We have seen this happen numerous times. The “slowdown” is framed through the rhetoric of following all safety rules. The result is a dramatic loss of efficiency at the ports. This applies both to the unloading of containers off vessels as well as making the containers available for pick up. Truckers have taken twice as long (or even longer) to pick up containers.

From news that we are receiving from truckers in New York this morning, we are already starting to see “slowdowns” take place at the very least at the ports in New York/New Jersey.

Jimmy Ting

jimmyting@great-world.com

Port Congestion Surcharge – update 9/7/2012

I have no positive news on labor dispute between the longshoremen and the East Coast ports. I am surprised that the potential strike hasn’t made more headlines and isn’t getting the attention of our Federal government. Even a “short” one to two week strike could have huge implications on our national economy, especially during the peak shipping season.

More carriers have filed a Port Congestion Surcharge in case of a labor dispute. Here is the latest that we have seen:

Carrier Item

20′

40′

40’HC

45’HC

APL Congestion Surcharge

$320

$400

$450

$505

ANL/US Line Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

CMA Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

CSCL Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

ZIM Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

UASC Port Congestion Surcharge

$800

$1,000

$1,125

n/a

Maersk Congestion Surcharge

$800

$1,000

$1,125

$1,266

Cosco Congestion Surcharge

$800

$1,000

$1,125

$1,266

EMC Congestion Charge At POD

$800

$1,000

$1,125

$1,266

NYK Port Congestion Surcharge

$1,000

$1,000

$1,000

$1,000

Hanjin Port Congestion Surcharge

$800

$1,000

$1,125

$1,266

K Line Congestion Surcharge

$800

$1,000

$1,125

$1,266

YML Port Congestion Charge

$800

$1,000

$1,125

$1,266

HMM Port Congestion Surcharge

$1,000

$1,000

$1,000

$1,000

Hamburg Sud Port Congestion Surcharge

$800

$1,000

$1,000

n/a

Matson Port Congestion Surcharge

$500

$500

$500

$500

Please keep in mind that the surcharge will only take effect in the event that a labor related slowdown/stoppage occurs (strike / lockout / etc.).

We are seeing more importers change their all-water US East Coast bookings to the US West Coast. This has resulted in increasing congestion on vessels coming to the US West Coast.

-Jimmy Ting

jimmyting@great-world.com