Inches Between a Deal and a Lockout

  • 02/20/2015
  • Reporters Desk

A trail of ships waits to come into the Port of Los Angeles harbor to unload. Photo by Phillip Cooke

Labor Secretary Perez Aims to Bring the PMA and ILWU Away from the Brink

By Terelle Jerricks, Managing Editor

Before the Presidents Day weekend, the Barack Obama administration announced it was sending Labor Secretary Tom Perez to push the International Longshore and  Warehouse Union and the Pacific Maritime Association into agreement. This came after the PMA announced on Feb. 11 that it was not going to hire any workers for four out of five days covering that period, citing alleged slowdowns by the ILWU as their rationale.

PMA spokesman Wade Gates claimed that the PMA made a comprehensive contract offer designed to bring these talks to conclusion and the union made a request they knew the PMA couldn’t meet.

The PMA’s salvo was apparently intended to divide the rank and file from its negotiating committee and, by extension, their leadership. ILWU International President Bob McEllrath released a statement to the union membership, noting the negotiating committee’s mandate are the 100 local resolutions that were submitted to the contract caucus this past year—resolutions agreed upon by the membership.

“When the parties reach a tentative agreement consistent with the rank and file’s bargaining demands, the negotiating committee will bring the tentative agreement to the caucus for review and action, as required by the ILWU Coast Longshore Division bylaws,” McEllrath said.

“If approved by the caucus, the tentative agreement is subject to ratification by all class A and class B registered longshore workers and clerks in a referendum vote.”

The issue that’s supposedly holding up negotiations is the union’s request to end the virtual lifetime terms of the contract arbitrators—people that the PMA and the ILWU agree on to become referees in individual labor disputes between the union and the association. The union requested that the arbitrators change when the contract ends.

McEllrath noted that the request was made in light of cases where the impartiality of arbitrators was questioned.

“One of the remaining issues is the question of retaining arbitrators who have openly engaged in conduct that clearly compromises their impartiality, including the development of close and personal relationships that affect decision-making and the failure to disclose these particular relationships  and conflicts of interest.”

The PMA, in its announcement, said the union simply wanted to fire arbitrators that disagreed with the union.

Comparatively, the issue seems to act as a mask for larger changes that are taking place in the goods movement industry.

Earlier, when blame was traded over who was responsible for the pile of cargo container ships outside the ports, the formation of carrier alliances and the carriers divesting from their chassis assets was cited as the culprit.

Contract Negotiations in Larger Context

Federal Maritime Chairman and former Port of Long Beach Commissioner Mario Cordero spoke to Random Lengths on the broader changes in the goods movement industry.

Cordero said the Federal Maritime Commission has been reviewing the carrier alliances, otherwise known as “vessel sharing agreements.” One alliance it has been paying particular attention to is the 2M Alliance.

“[The] two largest carriers in the world, Maersk and Mediterranean [Shipping Company] have frequently visited our nation’s largest ports o’ call, Port of Los Angeles and Port of Long Beach. Vessel sharing agreements…are [tasked with moving forward] economies of scale.

“The problem with this, in terms of logistics, is that [today’s large container ships] arrive at a gateway port and the distribution of the many discharged containers has become problematic.”

Cordero said that, though he believes terminal operators will adjust, the ports were unprepared for the large amount of cargo brought by megaships—despite the fact that leaders in the goods movement industry saw this tidal wave coming years ago.

“In my mind, the carrier moved forward to do this, however, there was no option put in place to continue the flow of container movement,” Cordero said. “What you’ve seen is not enough chassis being available and the chassis that are were rather problematic in terms of the assignment of these chassis, including who were entitled to use these chassis.”

However, the emergence of carrier alliances aren’t the only changes taking place.

A number of international container terminal companies have surfaced, challenging more established companies. According to the latest Global Terminal Operators annual review released by Drewry Container Insight, two new entrants have been added to the list of global terminal operators this year—France-based Bolloré and China Merchants Holdings International (CMHI).

CMHI recently acquired a 49 percent stake in CMA CGM’s Terminal Link—Terminal Link is a terminal operator with 14 bases of operation around the world. CMA CGM is also a member of the PMA.

Drewry forecasts that global container terminal volumes will reach 840 million TEUs by 2018, with an average growth rate per year of 5.6 percent.

According to Drewry, the grouping of carriers into major alliances will cause alliance members to increasingly want to bring container volumes together in one terminal.

Neil Davidson, senior analyst for Drewery, noted that terminal capacity at many ports is fragmented and scattered for historical reasons. This makes bringing capacity together in a smaller number of larger terminals in one port difficult because of the significant expense.

“But that’s the nature of demand, which is also tied in with the introduction of bigger ships, and begs the question of who is going to pay?”

 

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