West Coast

PMA and ILWU Announce a Tentative Contract Agreement!!!

February 20, 2015

The ILWU and PMA have finally come to a tentative contract agreement. The ILWU has been working without a contract since July 2014. In that time, we have seen the West Coast ports come to a virtual standstill.

Details about the contract are still unknown. Both the PMA and ILWU have to ratify the contract. It does look like having the Secretary of Labor, Tom Perez, join in the contract negotiation process earlier this week has helped push the two sides come to a contract agreement.

Assuming the contract is ratified by both sides, it still is going to take months for the congestion to unwind. Importers and exporters should not expect ports to suddenly start operating efficiently. There is still a backlog of containers that need to be picked up from the ports as well as export and empty containers that need to be returned to the port. Furthermore, vessels are all over the place. Carriers will need months to get their schedules back on track. Most importantly, the basic infrastructural issues that have contributed to port congestion remain unresolved.

I will look on the bright side and say that we hopefully have the worst behind us (at least until this five year contract expires). I am happy to finally have some good news to announce after months of negative news.

Have a great weekend everyone.

-Jimmy Ting
Great World
jimmyting@gwlcorp.com
t: 650-873-9050 x1019

West Coast Ports Still Open … Sort of… Maybe… Perhaps… Perhaps Not…

The word of the day is ambivalence. The title of the newsletter describes exactly how I feel about the West Coast port situation. Here is what we do know.

  • We haven’t heard of a terminal shutting down through the first three days of this week. Yay!
  • The PMA indicated that they will suspend vessel operations for four days during this holiday weekend. Boo!
    • Thursday, 2/12 (Lincoln’s birthday – holiday)
    • Saturday, 2/14 and Sunday, 2/15 (Weekend – similar to what happened last week)
    • Monday, 2/16 (Washington’s birthday – holiday)
  • The ILWU has claimed that the two sides are “this close” to an agreement. Yay!
  • The PMA mentioned on Wednesday that the ILWU’s latest contract demands are ridiculous. Boo!
  • Maersk has announced more vessel sailings to Oakland will be discontinued with containers stranded in Los Angeles. Importers will have to pay for moving the containers to Oakland from their own pocket. Boo!
  • We have not seen other carriers follow Maersk’s lead on this yet. Yay!

I get the feeling that we are close to a port shut down and at the same time so close to a contract agreement. If there was certainty of a port shutdown or of a contract agreement in the coming week, importers and exporters would be better positioned to make decisions regarding how to act. However this uncertainty leaves the shipping community feeling paralyzed.

Even if a contract is agreed upon in the coming week, it is going to take months to reduce the congestion. The one thing we should continue to expect in the coming months is congestion.

-Jimmy Ting
Great World
t: 650-873-9050 x1019
email: jimmyting@gwlcorp.com

West Coast Ports to Temporarily Suspend Weekend Vessel Operations

February 6, 2015

After the PMA’s announcement earlier this week that West Coast ports are on the verge of an involuntary port shutdown, we maybe seeing the process slowly playing itself out. The PMA announced today that terminals would not be hiring labor this weekend for vessel loading and unloading. Terminals had already a few weeks ago discontinued night operations for vessel loading and unloading. For the terminal operators, it didn’t make sense for them to be employing labor to remove containers into already congested terminals. This announcement will only further delay cargo arriving at West Coast ports. Note that labor will still be used for basic yard, rail and gate operations.

Another indication of how close we are to a complete terminal shutdown is the fact that numerous terminals are not allowing return of empty containers. In such circumstances, will the carrier charge for detention fees? Who will pay for the chassis rental fees for each day the container sits outside the terminal with a chassis? Won’t this only exacerbate the chassis shortage issue? How LONG will terminals delay the receiving of empty containers?
___________________

Carriers beginning to declare Force Majeure?
Maersk made a decision this week to drop all Oakland bound containers on the DS National v.503 in Los Angeles/Long Beach. While other carriers have made similar decisions a number of times over the past month, the difference this time is that Maersk is terminating the shipments in Los Angeles/Long Beach and will not be responsible for moving the containers up to Oakland. With previous instances this past month, carriers have decided to rail the Oakland containers from Los Angeles/Long Beach. However by terminating the containers in Los Angeles/Long Beach, Maersk is in effect declaring Force Majeure. Maersk has made a similar decision with Oakland bound containers on the Gudrun Maersk, which has not yet arrived in Long Beach.

Importers with containers on these two vessels will be forced to arrange their own transportation of the containers up to Oakland. What makes this current circumstance so troublesome is the following:

  • Maersk is requiring that the empty containers be returned to the terminal from which it was picked up.
  • However the terminal is incredibly congested and from what we have heard is unable to receive a return empty container.

Importers are therefore facing a no win situation. They can pick up a container, but face possible detention charges and chassis rental charges. Or they can leave a container inside a terminal and face demurrage charges. All of the above is assuming that a trucker can even be located who is able to pick up the container.

Assuming other carriers begin following Maersk’s decision above, we can only expect to see even more container congestion in Los Angeles/Long Beach.

-Jimmy Ting
Great World
jimmyting@gwlcorp.com
t: 650-873-9050 x1019

PMA Provides Clarity on a Possible Port Shutdown

PMA Provides Clarity on a Possible Port Shutdown

Wednesday, February 2, 2015

As mentioned yesterday, rumors are flying around that West Coast ports will begin shutting down gradually this week (either via lockout or strike). This afternoon, James McKenna, President and CEO of the Pacific Maritime Association, the organization negotiating on behalf of the steamship lines and terminal operators, sent out a public video message. The message spells out the following:

  1. The impact of slowdowns at the terminals the past three months has reach critical levels.
  2. The offer that the PMA has presented on the table for the ILWU is more than fair. This is the first time that details of the offer have been made public. Detailed information regarding negotiations have been heretofore subject to a news blackout.
  3. A line is being drawn in the sand. McKenna seemed to imply that there is impending gridlock and that if the ILWU doesn’t act to approve the latest offer on the table, there is nowhere left to go other than a work stoppage.

The ILWU has not yet responded to McKenna’s public statement. However what we are seeing here is a tension ratcheting up, not down.

I will continue to provide updates as we receive them.

-Jimmy Ting
Great World
t: 650-873-9050 x1019
jimmyting@great-world.com

Possible West Coast Port Shutdown

It appears just as we were seeing signs of hope last week, the West Coast ports may be heading full steam towards the shutdown that we have all been fearing. CBFANC (Customs Brokers & Forwarders Association) has issued the following update from Pacific Coast Council’s Peter Friedman:

“I have refrained from spreading all the rumors, but this one has firm basis and warrants preparation:  it appears that there will be a gradual lockout this week, expanding over the weekend, and fully implemented next week. It is possible the ILWU will take some action to be the “first” to act, but the result will be the same – shut-down of the west coast.”

As of Tuesday afternoon, February 3rd, Great World has NOT yet seen any signs of a gradual lockout on the West Coast. In fact, we saw some small improvements at various terminals this past week. We are going to be vigilant and report any signs of a real lockout or shutdown.

Let’s keep our fingers crossed and hope that we are not staring at a shutdown.

-Jimmy Ting
GWL Corp.
tel: 650-873-9050 x1019
email: jimmyting@gwlcorp.com

Are We On The Verge of a Complete West Coast Port Shutdown?

Update on Port Conditions

I don’t want to be the boy who cried wolf, and I certainly have been ringing the alarm often these last few months. However recent actions at the West Coast port terminals have undeniably put us right on the brink of a complete port shutdown. With all three major ports areas (Seattle/Tacoma, Oakland, Los Angeles/Long Beach) discontinuing longshoremen labor at night to unload containers off vessels, the port conditions will only continue to get worse.

In the past few weeks we have seen the following:

  • SSA and BENT terminal in Oakland shut down last Thursday due to disagreement between the ILWU and PMA..
  • Five strings calling the port of Oakland have been eliminated. This will significantly decrease the capacity coming to Oakland. Those with containers on vessels that eliminated the Oakland port calling will have containers railed to the port of Oakland from the port of discharge.
  • Vessels continue to sit at the port of Los Angeles/Long Beach for multiple weeks before departing.
  • Containers that are unloaded from vessels have an increased likelihood of being put into a closed area.
  • Steamship lines and terminals are in some cases barely extending any free time when containers are put into closed areas.
  • Some terminals are refusing to accept empty container returns for extended periods of time.
  • For export shipments, some terminals are refusing to accept loaded containers that are ready to be delivered to the terminal. This only acerbates the chassis shortage problem as many of these loaded containers are sitting on chassis that are much needed on the import side. One of our trucking partners indicated to us that they have over 300 loaded export containers sitting in their yard or at their customer’s dock waiting for the terminals to accept them.

I mentioned that the PMA and ILWU agreed to Federal Mediation at the beginning of the year. Mediation was supposed to be accompanied with a news blackout. However both the PMA and ILWU have been trading public attacks leading us to believe that mediation is not working.

My feeling is that the next step will be a complete port shutdown. There’s no where left for the situation to progress to. One local carrier representative mentioned to me that we should pull out from the ports as many containers as we can right now as a shutdown could happen any moment. I found this comment amusing as no one is holding back on pulling out containers. We’ve been desperately trying to get containers out as quickly as possible these last few months. The trucker who has 300 export containers waiting to be returned to the terminal also believes that this situation cannot go on for long.

Monday, January 19th, is MLK holiday. Some terminals are open. Others will be closed. A few will be open in limited capacity only. One less day to pull out containers will not help.

I hope I am wrong about a shutdown, but all signs indicate that we are sitting on the precipice and staring straight at a shutdown.

What alternatives do shippers have?

Many shippers have come to me asking me what alternatives they have.

  • If they have the ability to ship to the East Coast or perhaps to Houston, this is an alternative. Note that transit time is long (but perhaps not as long as having to wait it out at the West Coast ports). Furthermore, capacity on vessels to the East Coast is also very tight.
  • What about Canada? If you ship to the Midwest, you should undoubtedly be looking at rail through Vancouver or Prince Rupert as an alternative. However for those on the West Coast, is Vancouver really a viable option? The product would have to be removed from the container and transloaded onto a trailer before being trucked to the most locations in the United States. I recently priced this service out with a few various truckers. The current rough estimated cost to get a container of product from Vancouver to the San Francisco Bay Area would be somewhere between $4500 and $5000. There would be some variation depending on the size of the shipment and whether or not the product floor-loaded or palletized. This is a very rough estimate that could certainly change in the coming months/
  • What about air freight? This would have to be a last resort as air freight rates will assuredly surge during this time.

We will be watching this situation closely and providing updates as we receive them.

– Jimmy Ting
Great World
jimmyting@gwlcorp.com
t: 650-873-9050 x1019

Truck Protest at the Port of Oakland Today (Monday, December 8, 2014)

Conditions at the West Coast port terminals have seriously deteriorated in past weeks. I have been writing about how horrible conditions have become awful in the past month. Apparently, drivers at the port of Oakland have had enough. We received a message last Friday from one local trucking company that drivers at the Oakland port were intending to protest at the port terminals today, Monday, December 8th. We have confirmed this morning that many trucking companies are indeed facing a protest. Here is a message from one our local drayers:

Today , drivers have not shown up for work  in support of the truckers work stoppage  against the unreasonable delays at the terminals and to highlight their complaints against Union workers. We have learned that numerous drivers, including our own independent contractors, have agreed not to work , either to join their support to the protest, or out of fear for their safety.. Moreover, several transportation companies will not be sending their drivers to the terminals on the day of the protest.

This protest at the port of Oakland is unfortunate in timing, but should not come as a surprise. We have seen the West Coast terminal situation become absolutely unbearable as truckers are not able to consistently get into the terminals to pick up and return containers.

I would like to also share a snapshot of messages we have received this past week from what we consider to be some of our long standing most trusted trucking partners along the U.S. West Coast.

  • “There most likely will be demurrage charges for this container. We will only accept if you guys guarantee demurrage for however many days we need to pull container. Also, once your container becomes available, we won’t be able to schedule until the LFD. We have too many demurraged containers at the moment. Please confirm. Thanks”
  • ​”Well received and even we got the order days ahead before the arrival, there’s no sufficient time to pull out containers from terminals. Due to terminals congestion, we don’t guarantee pickup of containers on or before the LFD​​. Please provide allowance for additional chassis usage because we’re havi​​ng problems on the return too.  Thank you.”
  • “Notes:  Due to the current situation at Oakland Port, we will not be ​responsible for DEMURRAGE CHARGES if container​ ​is not p/u before the last free date​. In order to process the order and assured that we received the document we​ ​will acknowledge receipt of your order by providing a REFERENCE#. If we do​ ​not reply, please contact us immediately”​

The reality is that there is no guarantee these days that a driver going into a terminal will be able to get out of a terminal in any reliable time frame, if at all. In the past, trucking companies were able to schedule drivers to arrange pickups and deliveries ahead of time with a basic amount of certainty. However under current conditions, trucking companies are having to turn away pick up and delivery requests because they just cannot be sure their drivers will be available to successfully get into a terminal. If the trucker does accept the delivery order, they are requesting that we provide a flexible time frame for actually retrieving the container. This means that there WILL be a possibility that a container may not be picked up until AFTER the last free day. This means there may be BOTH demurrage charges to be paid to the terminal AND waiting time charges to be paid to the trucker. In the case of the port of Seattle and Tacoma, we ask that importers be aware that trucking companies are having extreme difficulty even returning empty containers. This can lead to storage and detention charges on empty containers.

Many of our long time trucking partners have turned away a large amount of business in recent months. This turning away of business has only accelerated in recent weeks with various truckers already stating they are booked through much of the month of December.

I have been pleading with our customers to be patient and flexible in this time. If we are assisting you with your trucking moves, this means that we ask that you be understanding if we indicate that we are looking for drivers that can assist with a delivery. You may find that we are using alternative trucking companies outside of normal ones you are used to working with. We ask that you be understanding if we indicate that there may be demurrage and/or special waiting time/congestion charges associated with a pickup.

Great World is first and foremost a service company that has the best interests of our customers at heart. We value our long term partnership with our customers and believe strongly in building mutually beneficial relationships. This is an extremely trying time. We ask that you work with us as well as the trucking community to get through it.

If you have any questions, feel free to contact me.

-Jimmy Ting
Great World
t: 650-873-9050 x1019
jimmyting@gwlcorp.com

Port Congestion Surcharge Returns! (November 21, 2014)

As expected, carriers are starting to announce the return of the Port Congestion Surcharge. Carriers postponed the PCS earlier this week due to concern from the FMC. However the carriers are indeed struggling with the congestion at the ports. As long as congestion continues, it is of no surprise that the carriers would try to find a way to implement the PCS.

Here is the latest breakdown from the various carriers and where they currently stand. I have indicated in bold below the carriers that have confirmed the PCS again. Please be careful to distinguish the effective dates and whether they are based on the Gate-In date at the port of origin or whether it is base don the discharge date at the destination port.

I do believe other carriers will soon be jumping back in and assessing the PCS. I will keep everyone updated.

US PORT CONGESTION SURCHARGE 2014 Last update Nov 21 2014
Carrier Applicable on shipment Discharge or Via $20 40′ HQ 45′ Effective Date on/after Remark
APL All US Ports 800 1000 1125 1265 TBA Gate in Date at origin (based on last container gate in date in B/L)
CMA LGB/LAX Ports 800 1000 1000 1266 Suspend the implementation until further notice Discharge Date at USWC Ports
COSCO All US Ports + Canada Ports 800 1000 1125 1266 TBA Discharge Date at Ports
CSCL USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
EMC USWC Ports 800 1000 1125 1266 21-Dec-14 Discharge Date at USWC Ports
Hamburg USWC Ports 800 1000 1125 N/A Suspend the implementation until further notice Discharge Date at Ports
Hanjin USWC Ports + Canada Ports 800 1000 1125 1266 26-Nov-14 Gate in Date at origin
Hapag Lloyd USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
Hyundai USWC Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
K-line All US Ports 800 1000 1125 1270 TBA Gate in Date at origin
Maersk USWC Ports + Canada Ports 800 1000 1125 1266 Postpone until further notice Discharge Date at Ports
Matson USWC Ports 500 500 500 500 3-Dec-14 ETD of the Vessel at Origin
MSC USWC Ports 800 1000 1125 N/A 26-Nov-14 Gate in Date at origin
NYK USWC Ports 800 1000 1000 1000 26-Nov-14 Gate in Date at origin
OOCL USWC Ports + Canada Ports 800 1000 1125 1265 Postpone until further notice Gate in Date at origin
PIL USWC Ports 800 1000 1125 Postpone until further notice Gate in Date at origin
UASC USWC Ports 800 1000 1125 Delay the implementation until further notice Discharge Date at Ports
WANHAI USWC Ports 800 1000 1125 1266 24-Dec-14 Discharge Date at Ports

-Jimmy Ting
Great World
t: 650-873-9050 x1019
jimmyting@gwlcorp.com

Port Congestion Surcharge Update (November, 18, 2014)

The situation regarding the Port Congestion Surcharge (PCS) remains fluid and changing on a seemingly daily, if not hourly basis. We received confirmation overnight from carriers (Maersk and MSC) who had as of yesterday not made a decision yet regarding the the PCS that they would indeed begin charging the PCS. This left APL, Cosco, and K-Line as carriers who had not confirmed the PCS. However we also learned today that Evergreen and CMA-CGM would be postponing the PCS. We have also heard that other carriers may consider postponing the PCS as well. We expect to be hearing more updates throughout the next 24 hours and will keep you posted.

Please keep in mind that the congestion at the ports remains an EXTREMELY serious problem. We are seeing delays throughout the USWC ports. Therefore importers/exporters should be conscious of the fact that the PCS could be reinstated at any time.

I did review a letter from the FMC indicating that they are investigating the PCS very closely. It is possible that the FMC is the reason why carriers are announcing the postponement of the PCS. If that is indeed true, we may see carriers look for alternative ways to implement the PCS in the near future.
-Jimmy Ting
Great World
email: jimmyting@great-world.com
tel: 650-873-9050 x1019

ILWU Contract Negotiation Update, July 2, 2014

The ILWU contract expired on June 30th and thus far we have not seen any major labor action. The ILWU and PMA issued a joint statement yesterday indicating their intention to continue keeping cargo moving until a new agreement can be reached.

If you have any questions, feel free to contact me.

Jimmy Ting
jimmyting@gwlcorp.com