Unfortunately: “I told you so.”

I started this blog in November 2014 because I needed an outlet and a platform to explain to the general public the possibility of economic tragedy on the west coast if the status quo was allowed to continue. I’ll be extremely brief: the west coast port slowdown was the result of a failure to collectively bargain between the ILWU (International Longshore and Warehouse Union) and the PMA (Pacific Maritime Association). Collective bargaining absolutely and categorically FAILED the United States. It failed the import/export business on the west coast especially. It failed American agriculture that relies on an efficient transportation system to get its superior goods to market. And in essence it failed the American economy. It’s failure is my reality.

One of the main theme’s of my advocacy on this issue is this, and stated in this blog post:

Oregon’s Agriculture is NECESSARY for the continued strength of the state. But if we can’t get it to market, then what good is any of it?

I would suggest the same for American agriculture. According to a Joint Economic Committee of the United States Congress report:

“The agricultural sector makes an important contribution to the U.S. economy, from promoting food and energy security to supporting jobs in communities across the country. Exports are critical to the success of U.S. agriculture, and population and income growth in developing countries ensures that this will continue to be the case in the decades to come. U.S. agricultural exporters are well positioned to capture a significant share of the growing world market for agricultural products, but some challenges remain. Taking actions to facilitate exports would help to strengthen the agricultural sector and promote overall economic growth.”

The AgTC (Agriculture Transportation Coalition) has been stating this for years:

“There is nothing that we produce in this country in agriculture, that cannot be sourced somewhere else in the world. We can grow the best in the world, but if we can’t deliver affordably and dependably, the customer will go somewhere else…                                        and may never come back”.

The theme here is obvious and overwhelmingly simple: for the sake of America’s economy, our ports need to work efficiently and productively.

And then this article drops today: Chinese Goods Bypass California.

 

Ports 1

Wall Street Journal: Chinese Goods Bypass California

Let me explain this in simple terms. Let’s say Fred Meyer’s is your favorite grocery store, but for some reason the traffic is horrible specifically in front of that store. One mile down the road, there is a Safeway with no traffic and has easy access. It’s a little harder to get there, but you start going to Safeway because it is efficient to do so. If Fred Meyer’s fixes the traffic problem, do you go back? Maybe. But also maybe do you stay with Safeway because you like the store and you’re now used to it? Possibly.

This is what the Wall Street Journal article speaks to. The west coast ports has a traffic problem. The east coast ports do not. China is choosing to spend a little more time and effort to ship into the east coast ports. And they might just find they are easier to work with. Will they make the move? Maybe. Will they ever come back? Maybe.

Anyone want to take this risk? I don’t. But it’s not up to me.

I’m going to be frank. The only person or entity that can take on the ILWU and the PMA is the President of the United States and the United States Government. I tend to be an optimist, but the fact that my hope is in the U.S. Government isn’t appealing and leaves me with a sense of hopelessness. I’m a believer in the Free Market. But, collective bargaining isn’t typically conducive to the free market. It’s ugly out there folks.

I could blather on for another couple hours about global trade routes and manufacturing in Asia moving east, ultimately making it easier to move product into the east coast ports of the U.S. Considering 2/3 of the population lives in the eastern U.S., this sounds like a good idea. What happens to our empty containers that we need to load for export on the west coast if all the containers are on the east coast? Even those not familiar with agriculture knows we can’t move our 250 different crops from Oregon to Kentucky. Also, I would suggest the southeastern states are more conducive to this little word: business. That is all for another discussion on another day.

My point: Let’s not give ship lines any more reason to bypass the west coast ports. I feel like I’ve said this too much lately, but: Wake Up America.


 

For more background information, visit my previous blogs on the West Coast Port Slowdown.

Why this affects you.

Day 29… and counting.

AgTC: Statement of the Agriculture Transportation Coalition

Port Crisis 101: history of, where we stand, and a little of my own opinion…

The battle continues… West Coast port crisis not over.

Port Crisis? Still. Not. Over.

1-Year Recap of the West Coast Port Crisis – the ship that sailed

1-Year Recap of the West Coast Port Crisis – the ship that sailed

At this time, one year ago, any truck delivering containers to a West Coast port knew something was up. Terminals were slow, truck lines were long, communication between terminals and trucking companies was confusing. As an exporter, our greatest fear of that time was coming to the forefront of our world: the contract between the ILWU and the PMA that had expired on June 30, 2014 and was still being negotiated “in faith” had come to a tipping point. Multiple times did both sides confirm cargo would continue moving during negotiations – see Press Releases here – when in fact, that ended up being untrue.

By day 5 of the “West Coast Port Crisis”, I already knew what was going on – and knew that the only answer to this problem lay high above one person, one industry, or one state government. See my synopsis on November 7, 2014 here. If you want more history on the crisis, I wrote many blog posts throughout the crisis at my blog: www.DaughterofaTrucker.com.

Where are we now?

Our export industry is struggling. The impact on every industry is different. For the industry I’m involved in, grass straw exports, because of last year’s crisis and exporters not being able to get their forage to market, we had an oversupply by the time our next crop came around. For the Christmas Tree industry, we’ll see in the next month whether they lost their customers from not being able to fulfill orders last year. Washington apples lost millions in sales – one person calling it the “worst year in her career”. Will they recover, and what business did they lose?

The problem is due to two factors: the apple crop is the state's largest on record, and labor disputes at the state's ports resulted in apples sitting for too long.

The problem for the loss in apples was due to two factors: the apple crop is the state’s largest on record, and the port dispute resulted in apples sitting for too long.

I asked a colleague who is involved in international trade for his perspective as an Oregonian living in Hong Kong, Shaun Harris. He shares the following:

Usually in Hong Kong, grocery stores have produce and food items from the US. When the port slowdown happened, suddenly you couldn’t get celery and lettuce from California for instance. You couldn’t get Almond milk or Tillamook cheese from Oregon. But soon enough, those spaces were filled with Australian and European goods. (Turns out the French make a pretty good cheddar cheese.) Go back into the store today and most of those items haven’t changed back to the US product. I’m sure you’ll see the same thing playing out all over the world.

On a professional side, we spent months apologizing to customers for lack of shipments, seeing Japan’s MAFF writing USDA a letter asking them to figure it out, then a deluge of shipments once they made it out of the gridlock. Soon after, everyone was fighting overstock and soon accumulating inventories on the US side caused market prices to erode. From which, they still haven’t recovered.

Oregon Christmas Trees which were so heavily promoted here in Hong Kong ended up being cancelled and customers who ordered them got their money back.

As you can see, this was not and is not a problem that has been fixed. Just because the contract was finally “tentatively signed” in February 2015 and later ratified, the long term ramifications are very real and aren’t going away. How many U.S. companies lost customers and/or business that may or may not get them back? What was the cost to these companies? How much of the economy was hurt in the US because of the monopoly the PMA and ILWU has over all of us? What can be done to ensure this does not happen again?

Liberty Street Economics blogThese questions are impossible to answer. It’s possible the GDP of the United States suffered for the first quarter of 2015 because of the West Coast Port Crisis – just the fact it is even in question should be a wake up call for Congress, for our President, for the American people. Can you even believe it? The crisis was so bad it affected the Gross Domestic Product of the United States of America. It is baffling our administration allowed this to go on for so long.

Any help on the horizon?

Maybe. The Transportation Bill is currently being debated in Congress. Amendments to this bill include asking for port metrics to be gathered, as well as asking the GAO (Government Accountability Office) to study the effects of the port crisis are all being looked at. In addition, Congressman Newhouse (WA) will be introducing the ECONOMICS Act (Ensuring Continued Operations and No Other Major Incidents, Closures, or Slowdowns Act);  this puts in place specific “triggers,” so that when certain economic impacts surrounding a dispute occur, a Board of Inquiry must be convened, and the Board is required to report to the President and the public to recommend whether there should be a judicial injunction. There are other bills that have already failed, and I believe there are more still to come.

Can Congress fix this problem? Absolutely not, nor would I want them to. But, in the current monopoly of the PMA and the ILWU, we will need the US Government to have the information in the future if this happens again. Changing law in order to have this information for future use is imperative. I applaud specifically Congressman Reichert and Congressman Newhouse in Washington, as well as Congressman Schrader and Senator Wyden in Oregon for listening to their constituents and being instrumental in ending last year’s crisis as well as moving forward to help US trade on the West Coast.

Any other ideas?

In the words of my uncle Allan: Move to Texas. More importantly and seriously, please stay involved, stay informed, and continue to monitor the life around you. I love our state of Oregon, I love the west coast (West Coast, best coast!), and I love the United States. Unfortunately that doesn’t make it perfect. Thank you for reading.

The battle continues… West Coast port crisis not over.

It’s not time to pour the champagne just yet. “Ship” hit the main-stream news fan late last week when Labor Secretary Tom Perez game both sides until Friday to settle the dispute or he would ship them off to DC to continue talks downstream from the White House. All puns intended. When news broke Friday evening that a contract had been tentatively signed, my Twitter blew up. Anyone not completely familiar with how things work thought this was over. Far from it. I know of both Ports of Oakland and Portland have both had skirmishes over the weekend. Apparently Local 10 in Oakland was found guilty of work stoppages. And the Hanjin Copenhagen is yet to sail from Terminal 6 at Port of Portland! That ship has been sitting for 19 days… We have 45 containers sitting on dock still waiting to load. Some of those containers have been there since January 15th. It doesn’t take a rocket scientist to realize that this is hurting the small businessman and farmer alike.

For a timely update aired by the Ag Information Network, see here.

Shippers have a very tough road head of them. Ship lines are trying to clear the backlog at whatever means necessary. We are fighting every day to keep ahead of schedules, getting trucks to port within the very short time-frame we are given – and us Oregonian businesses and farms are now behind the 8-ball because our options just became much more limited with Hanjin announcing they are pulling out of Terminal 6 at the Port of Portland. In one announcement, Port of Portland lost 80% of their containers business.

The complete lack of remorse and total disregard by both the PMA and ILWU for the havoc that ensued during this continuing crisis is repulsive. See very brief press release here. No “thank you for your patience”. No “we’re incredibly sorry for the suffering that America has endeavored.” And definitely no sign of “we will all work together to make sure the West Coast ports become synonymous with the best ports in the world!” Because of this and because of the economic pain and damage, we simply cannot let this happen again. We’re hearing that the contract was for 5 years. The clock is now ticking, the deadline is now set, and our next battle has been named: preventing a small group of people from holding the American economy hostage the next time the contract expires.

Wish us luck.

In the meantime, some comic relief… Here are our new names for a couple of vessels:

ship line just kidding

ship name MEHship line daylateship line almost

Day 29… and counting.

Day 29 of port issues: slow-downs, lack in port production, ILWU walk-offs, truck congestion, and all-over harm to business, agriculture and the economy. The long term repercussions of this are yet to be seen.

Let me clarify. It’s been 29 business days that we have struggled with this. November 3rd was a harsh reality when the first notification from my truck dispatch alerts me to issues. This was the email we received at 7:59am on November 3rd:

“We have been shorted almost all of our labor to work the yard today. The Union Hall has reported that they had “no man power” to fill the requested labor. We will be running at 25% capacity at best today. I would expect turn times to be in the 1-2 hour and if not longer. We would suggest holding off on any cargo that can be delayed until later in the week. We can’t stress enough that today will be extremely slow.”

We had NO idea that this was just the beginning of the chaos that would ensue and still continuing through today.

US Containers_Long Beach

Some background: The contract between the ILWU and the PMA has been negotiated since July 1, 2014. The previous contract expired on June 30, 2014 and both parties began the negotiating process for the new contract in May 2014. I probably don’t have to do the math for you, but we are in our 8th month of negotiations. It’s almost humorous. It is in fact beyond reason that two entities cannot come to an agreement in 8 months. It is beyond reason that because of these failing negotiations, that small business, agriculture commodities and West Coast state’s economies are hurting. It is beyond reason that our government is yet to step in and go up the chain of command and demand the President of the United States to order a Federal Mediator. The last we heard from the White House was mid-November when POTUS said he is “confident the two can come to an agreement.” Well Mr. President, it’s been 8 months. At what point do you step in? How long will you allow our PUBLIC PORTS to be inefficient, costly and unreliable?

Let’s look at what they may be negotiating. From multiple sources, it seems there are 2 items that are at the table: 1) Benefits. Specifically who pays the “Cadillac Tax.” 2) Automation.

1) The Affordable Health Care Act’s “Cadillac Tax” on generous medical plans is projected to cost the industry $150 million a year, according to Mr. James McKenna, CEO and Chairman of the Pacific Maritime Association. Employers (meaning the terminals and shipping lines, but ultimately us all as increases in costs always get passed on…) pay the entire cost of premiums for ILWU medical insurance. According to the PMA website: “The ILWU benefits package includes fully paid health care for workers, retirees and their families with no premiums, no in-network deductibles and 100 percent coverage of basic hospital, medical and surgical benefits. Prescription drugs are covered for $1 per prescription; dental and vision care are provided to workers, retirees and their families at little or no cost.” Employers say that plan is generous enough and, furthermore, they can’t afford to pick up any more expenses in that area. The ILWU does not want to pay for the additional costs. Frankly, I would argue that any red-blooded American would agree with the employers here! According to my source on Capital Hill, the PMA has already given into the ILWU’s demand of paying for the Cadillac Tax. Unbelievable to me. Completely unbelievable. Yet if this is true, then my guess is the ILWU saw the green light and went after more…

2) Automation. At first glance, more automation equals less jobs. Right? Here’s what I don’t understand. ILWU’s rallying call is “An injury to one is an injury to all.” So, the ILWU wants less technology, less automation. But what if it makes things safer? Would you accept it then? Or would you be so stubborn and immovable that you simply won’t listen to the word. If the long-term effect of no automation is business moving away from your ports that you work at, then you’ll lose your jobs anyway. I’ve read many articles and watched video’s of ILWU’s own spokespeople claim that “the boss’s” only focus is profit. See one here. Here’s a newsflash: business needs to make money in order to continue year after year. It’s called profit – and profit isn’t a bad thing. It keeps YOU getting that paycheck. You should be helping your boss make a profit – not be against the idea.

Maybe you noticed the email from above and it’s time-stamp: 7:59am on a Monday morning. Do I think it’s coincidence that this start of a slow-down happened at 7:59am on a Monday morning? About 3 weeks before Black Friday? Almost 2 months before Christmas? Absolutely not. The ILWU is very smart, very powerful, and very strategic. If they were to strike, the President could enact the Taft-Hartley Act. They didn’t. They began a long and calculated work slow-down as a negotiation tactic. And it appears to be working. Eventually they will get their way – and I would prefer it to be tomorrow, not next month.

So, you might be one thinking I am pro-PMA and anti-ILWU. I’m not. PMA? You’ve failed too.

PMA 2013 Annual Report

PMA 2013 Annual Report

President McKenna, I’ve read your 82-page Pacific Maritime Association 2013 Annual Report. You outlined these guiding principles last March when talking about the upcoming contract negotiations:

1) Given the tremendous economic impact (West Coast ports support more than 9 million U.S. jobs) of our industry across the nation, we will act with an awareness that these talks have ripples beyond the docks.

FAIL

2) With competition for discretionary cargo growing stronger every year, we will endeavor to enable West Coast ports to operate efficiently and productively.

FAIL

3) Knowing that a reliable labor force is essential to our ports’ standing, we will seek to deliver dependable labor on behalf of our members.

FAIL

I agree that these are important. I agree that “reliability, efficiency, and productivity will be the keys to success.” And you also say in your report that “…safety efforts led to the lowest level of injuries ever recorded.” Then what’s wrong? Why can’t you make this contract happen? I have to think that there is something inherently wrong here. Labor unions don’t realize that long-term success of the ports means long-term jobs for them. Employers either aren’t listening to the labor unions, or they don’t know how to communicate with them. Until these under-lying issues are rectified, then investment – and looking at the West Coast port’s future as positive – is futile.

The West Coast ports are the gateway of choice for goods sent to and from Asia. We are the most efficient route. Not considering anything else, the shortest route between Point A and Point B is always a straight line. Now when you bring in other variables, that line (or in our case, shipping route) begins to change. In 2002, there was a 10-day coast-wide port shutdown that sparked concerns. Add to this contentious contract negotiations between the Office Clerical Unit and the Harbor Employers Association in 2012, the ILWU Local 8 and the IBEW skirmish over who plugs in and unplugs reefers a few years back, and other regional grapplings have raised questions to the West Coast’s reliability. Was this enough to move cargo away from the West Coast ports? Yes it has.

East Coast/Gulf Ports showing a large increase over the past 6 years.

East Coast/Gulf Ports showing a large increase over the past 6 years.

Do not invest another dime into technology, into automation, into innovation. Not until you two INCREDIBLY POWERFUL entities can learn to talk to one another.  Here’s some advice: PMA, learn to communicate. ILWU, take some business classes. For the sake of us all.