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.

Port Crisis? Still. Not. Over.

Are you incredulous by this title, that we are still talking about this? You thought this was over, contract was signed? If you know me, or are an importer or exporter, or have trucks at the ports – then you know the day-in, day-out problems we are still having and knows that this crisis is far from over.

On February 20th, most of the US let out a collective sigh of relief – from the White House down to the lowly grass straw shipper. A contract had been signed! What we learned quickly is that this was a tentative agreement, needing to be ratified by both the PMA and the ILWU. Us shippers learned immediately that our constant state of chaos changed – but did not get any better. Wait times at ports for our trucks still exist to this day, congestion at the terminals is extreme, and communication from the ship lines to exporters and importers remain a “best guess.”

Approximately 90 leaders of the ILWU from the entire West Coast will met in a “Caucus” next week to review the contract. Should they decide to recommend that the contract be agreed upon, it will be submitted to the ILWU Rank and File for a 90 days review. And then a vote by secret ballot.

And then the following Journal of Commerce article comes out last night. I read this morning, and can’t do much except shake my head.

Militant ILWU faction calls for contract to be rejected

A group that calls itself the Transport Workers Solidarity Committee will sponsor a rally at 7 p.m. Pacific time on March 31 outside of the international headquarters of the ILWU on Franklin Street in San Francisco. According to a flyer distributed by the committee, six active or retired ILWU members will address the rally.

The committee spares no words in saying that it does not support the tentative coastwide agreement that was reached on Feb. 20 by the ILWU and the Pacific Maritime Association. “Left unchecked, it will gut the ILWU’s coastwide power and bury the last militant union in the U.S.,” the flyer states.

The tentative five-year contract maintains full employer-paid medical benefits. Longshoremen will retire with a pension that tops out at $88,800 a year. Hourly wage increases are more generous than in other contracts dating back to the 1980s. According to the PMA, full-time longshoremen last year earned on average $147,000. The hourly wage in the last year of the contract will increase to $42.18, but many longshoremen work in jobs that pay skill or overtime differentials that increase the base wage by 15 to 30 percent.

Citing the ILWU’s “proud history of class struggle and the fight for democratic principles codified in the Ten Guiding Principles,” the solidarity committee accused the ILWU leadership of flouting those principles, “using top-down control to direct longshore workers to cross picket lines and keep contract negotiations secret.” The ILWU headquarters declined to comment on the flyer.

The flyer plays loose with certain facts. It accuses the PMA of providing JOC.com with a copy of the contract. While the JOC in fact received a copy of the tentative contract, it was not provided by the PMA or any of its members.

The committee charges that the tentative contract gives employers “a free hand to automate without counter demands of shorter shifts tied to wage increases.”  In fact, the 2002 coastwide contract gave employers the right to utilize computers and information technology at their discretion, and the 2008 contract gave employers the right to introduce automated cargo-handling equipment.

The lengthy and contentious negotiations did include demands by ILWU locals for extra manning in Northern California and a guarantee of 10 hours of pay for eight hours of work for ILWU mechanics in Southern California, but those demands were turned down in the negotiation process.

In possibly the most bitter comment in this short commentary, the flyer said the tentative agreement “follows on the tail of the concessionary grain contracts at EGT and the Northwest Grain agreements.” Some forces within the union are still livid over grain contracts in 2012-13 that were negotiated by the ILWU and grain terminals in the Pacific Northwest. The international grain companies that negotiated those contracts are not members of the PMA and the grain contracts are separate from the coastwide contract.

Since the ILWU has nowhere near the leverage over the international grain companies that it has over shipping lines, the grain contracts are considered more employer-friendly in that they make it virtually impossible for the ILWU to engage in work slowdowns that give union negotiators huge leverage in contract negotiations as well as in the handling of health, safety or work-rule claims during the life of the contract.

Jurisdiction was a sticking point in the negotiations that went on for nine months and led to massive delays up and down the coast. The tentative contract grants jurisdiction to the ILWU to inspect and repair most chassis before they leave the marine terminals, even though PMA-member shipping lines no longer own the chassis.

The tentative contract will also establish a three-member panel in each of the port regions to adjudicate the health and safety and work-rule disagreements that arise frequently on the waterfront. Instead of having just one local arbitrator in Seattle-Tacoma, Portland, Oakland and Los Angeles-Long Beach as is now the case, each panel will include a member nominated by the ILWU, one by the PMA and a third who is a member of either the Federal Mediation and Conciliation service or the American Arbitration Association.

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

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

Over the past few weeks, the port crisis has been on the news, on the radio, and in the newspaper. Those of us that have been aware of this since last May are pretty versed on what’s going on. Or if you happen to be a friend of mine, then you I’m sure have been briefed on the subject. 🙂 Sorry not sorry. There was a recent article in the Oregonian on the background of the Port of Portland – a fantastic article showcasing the history of what has brought us to this point at the port. Very sad, very true. I had a local farmer in my office asking me, “Is it really that bad?” Yes, it’s really that bad.

That article really showcased the Port of Portland, but if you want to learn more about the crisis ensuing at all West Coast ports, let me take a shot at it… (With help from the AgTC)

THE PLAYERS

  1. Port Authority – a public government entity which owns the land. It is the landlord. In California, Ports are a division of the local City government – so the Ports of LA, Long Beach and Oakland are controlled by the Mayors. Port of Portland is an entity of the State of Oregon. Seattle and Tacoma are independent governments (and their marine departments are merging).
  2. Marine Terminal Operator – is the tenant. It is a private company which leases a piece of the Port Authority’s land, typically for 5 to 50 year terms. (Note the Port of Portland’s terminal operated signed a 25 year lease. I believe they are on year 3 of the lease.) Millions of dollars are invested in cranes and other equipment, some funded by the landlord Port, some by the tenant Marine Terminal Operator. The Terminal Operator hires longshoremen (who are represented by the ILWU) to operate the equipment and load and unload the ships that dock at the terminal, but also working in the container yard to load and unload containers on and off the trucks. If a terminal has an on-dock rail yard, containers are loaded on and off the rail cars by longshoremen labor.   There are three basic kinds of terminals:
    • “Bulk” handle grain, soybean, oil — in huge tanks or elevators, and pour the product into massive compartments of ships. These bulk terminals are operating under a separate contract with the ILWU, and there is currently no dispute and no disruption to operations.
    • The other primary terminal, is a “container terminal” where ships are loaded/unloaded with those steel boxes, generally 40 foot x 8 x 8 (called a Forty Foot Equivalent Unit or FEU) or 20 foot x 8 x 8 (TEU). There are dozens of container terminals on the West Coast, ranging from one container terminal at Port of Portland, to eight at Port of LA and six at Port of Long Beach. The terminal operator, hires the labor (longshoremen) to operate the terminals. The current labor dispute centers on these container terminals. The operators of these container terminals are members of the Pacific Maritime Association (PMA), which is representing them in negotiations with the International Longshore and Warehouse Union (ILWU, see below) on the marine terminal labor contract.
    • Also, there are “break-bulk terminals.” Some cargo does not move in containers, but are stowed loosely in the hold of a ship. For example, rolls of newsprint, or coils of steel, or palletized fruit. The current ILWU –PMA dispute has largely (but not completely) spared these terminals.
  3. Steamship Lines (actually, none operate with steam power – it is petroleum fuel), are also known as “ocean carriers”, or just “carriers”. There are about 20 major ocean carriers carrying US international trade, import and export, to and from West Coast terminals. All are private companies, all are foreign companies, headquartered in Asia, Europe and the Mid-East. None are US owned companies. The steamship lines enter into long term contracts with container terminal operators, often agreeing to share costs of container cranes and other infrastructure. They typically pay the terminal operator a fee per container loaded on the ship, or unloaded, under various arrangements.
  4. Labor. The International Longshore and Warehouseman’s Union (ILWU) represents 100% of the labor force at the US west coast marine container terminals. These include all levels of labor, including skilled crane operators, operators of equipment who stack containers, lift containers on and off of the trucks, clerks who check others’ work, those who run the gates at which trucks enter and exit the terminals checking documentation, plug and unplug refrigeration units on containers, etc.
  5. Pacific Maritime Association (PMA). This is the organization comprised of the West Coast terminal operators and steamship lines that negotiates the labor contract with the ILWU. All compensation, wages, benefits, work rules, vacation, and dispute resolution procedures, are covered by the PMA-ILWU contract.
  6. The Hiring Hall. This is an historical labor hiring mechanism, today unique to longshore labor, passionately defended by the ILWU. Under the hiring hall mechanism, no regular team of longshoremen (crane operator, checkers, mobile equipment operators, etc.) show up at the same terminal each day, familiar with the requirements of the job, and with each other. Instead, the terminal operator, each morning, calls the ILWU Hiring Hall, and puts in an order for a crew, or number or workers. The ILWU dispatcher then sends out whatever group he assembles. That is the crew that works that terminal that day – rarely the same combination of individuals, with varying degrees of experience, work ethic and familiarity with the equipment. It obviously impacts the productivity of terminal operations. In some ports, such as Charleston and Savannah, the terminal workers are organized as regular crews, working together – as in virtually every warehouse or manufacturing enterprise, or as is the case in Ports around the world. The lift rate on and off the ships at Charleston and Savannah is approximately 42 or 44 containers an hour per crane (similar to Europe). On the US West Coast, it is typically 27 to 28 containers/hour. In my opinion and from running crews and business myself, this is a very strange and seemingly extremely inefficient and unproductive way to do things. I would like the chance to understand the reasoning behind this mechanism the ILWU still uses. I wonder if there is any reasoning behind it or if it’s simply “how it’s always been done.”
  7. Federal Mediator. Ideally, the PMA and ILWU can and do negotiate each contract (every 3 or 6 years) on their own. However, when the two parties cannot reach agreement, they can request assignment of a mediator by the Federal Mediation and Conciliation Service. Both parties have to agree to use the mediator, who is engaged only for as long as both parties want him/her to assist in the negotiations. The mediator has played a central role in helping the ILWU and PMA, as well as the East Coast longshore union and employers, resolve contract disputes on several occasions in recent years. According to a Journal of Commerce article, for contracts covering more than 1,000 workers, the success rate was 76.6 percent in Fiscal 2013.

THE ISSUES

  1. ILWU- PMA Contract. The contract contains all aspects of the working relationship between longshore labor and their employers, the PMA. Pay, benefits, work rules, arbitration mechanism to resolve disputes as they arise. The contract expired June 30, 2014. With exception of a brief extension, the ILWU and PMA have been operating without a contract and thus any dispute resolution mechanism.  Negotiations have continued on and off, on the following issues (note these are “believed” issues as negotiations are tight-lipped except for the very slanted press releases coming from one of the parties):
    • Automation: Automation means fewer longshore jobs. To protect their jobs, ILWU has successfully limited ability of US west coast terminal operators to install automated cranes, readers and other equipment that are commonly used throughout the world. ILWU seeks to limit the introduction of automation, and protect jurisdiction.
    • Jurisdiction: To the extent automated machinery is introduced, ILWU wants to assure that ILWU members (as opposed to Machinists Union or International Brotherhood of Electrical Workers) have the work.
    • Affordable Care Act (ObamaCare) imposes an excise tax on the “Cadillac” health care plans, to raise money to pay for health coverage for those who can’t afford it. As the ILWU health benefits are among the most generous in the world, they are subject to this excise tax. The ILWU members do not wish to pay the excise tax, as this would make their benefits no longer 100% free. PMA says the terminal operators cannot afford to pay the $150 million annual cumulative excise tax. While no public statement has been released by the PMA and ILWU, it appears that they have agreed to deal with this by “kicking the can down the road”: since the excise tax doesn’t kick in till 2018, they may agree to a 3 year contract, and leave this excise tax issue for the next contract negotiations.
    • The ILWU wants the right to unilaterally fire a local arbitrator. Local arbitrators are appointed jointly by the ILWU and PMA, with a local arbitrator serving in each of the major port ranges on the West Coast. When the coast wide contract is in force, and a dispute arises between the employer and the ILWU local, an arbitrator is called in to gather testimony and render a decision. In most instances, the local arbitrator can prevent what is often a minor disagreement from shutting down a marine terminal for an entire day, or longer. In the worst case scenario, as is occurring right now, the absence of the arbitration process can allow work slowdowns to continue endlessly. Does it make any sense to any of you that either party should be allowed to fire an arbitrator? Wouldn’t that give any party simply too much power? The right to fire the exact individual that is supposed to either rule in favor or against you? I would suggest that we would all be in agreement that this is simply too much power for any one side.
    • Chassis: When the chassis were under control of the ocean carriers, the ILWU did some of the chassis repair work. Now that the carriers are divesting themselves of the chassis, turning ownership and management to independent leasing and trucking companies, who will have jurisdiction over chassis repair work? The independent leasing companies and truckers are not a part of the PMA and are therefore not a part of the current negotiation between the ILWU and PMA. INSERTING MY OPINION HERE: According to the ILWU, and quoted from a source that I need to remain private (therefore not verifiable), there was a letter sent to Members of Congress urging them not to sign onto a previous Congressional letter.  In that letter, it is quoted regarding the Chassis M&R (maintenance and repair): “It’s an important issue in terms of preserving and protecting the jobs of hundreds of ILWU mechanics but more importantly we want chassis on the road that are maintained and do not endanger the lives of the driving public.” May I break this statement down? The ports no longer own the chassis (explained below). This got phased out over the course of the last year or so. Private leasing companies, or like in the case of our company, individual companies own their own chassis. These companies are responsible for the maintenance and repair of the chassis that they OWN. The Federal Motor Carrier agency and Dept of Transportation set incredibly strict guidelines that we follow to ensure safety on the road. Between our 2 truck shops, we have certified mechanics performing Annual Inspections on these and every other piece of equipment being used on the road. We also have pre-trip inspections performed by truck drivers every single day these are being used. For the ILWU to want jurisdiction over and responsibility of this task is ludicrous. The lives of the driving public have absolutely nothing to do with the ILWU. To put it bluntly, it is not the ILWU’s job or responsibility to maintain safety on the roads. If a chassis that they inspected were in an accident, would the ILWU take responsibility? I think not.
  2. Port Operations Disruption. Since May 2013, all West Coast terminals have suffered job actions by the various ILWU Locals that have resulted in closure of terminals, ranging from several hours to several days. The pace of these labor actions accelerated in sporadic and unpredictable manner during September and October, 2014, and became a daily unpredictable occurrence at various terminals up and down the coast, since November 2014. Job actions include walking off the job, or not reporting for work, or the Hiring Hall sending less experienced labor. Sometimes the work is so slow, the terminal operator shuts down the terminal. ILWU claims PMA (terminal operators) are making the situation worse, by refusing to hire 2nd and 3rd shifts (at hefty overtime pay scale); PMA says that the longshoremen are working so slow as to force hiring 2nd and 3rd shifts, and they aren’t going to be “played”. The ILWU deny they are working slow.
  3. Other Factors Contributing to Port Congestion. As in any industry, there is ongoing change in ocean carrier and port operations. With effort by Ports, terminal operators, and labor working together constructively to meet challenges, it is possible to work through these. But when labor doesn’t show up to work, or takes steps to exacerbate the challenges, congestion is the predictable result.
    • Mega Ships, now double the size of the traditional container ships, depositing hundreds of containers at a time on the terminal. This taxes the available terminal space, increases the need for velocity in moving containers off the ships, onto the trucks or rail, and out the gates.
    • Alliances. The steamship lines, taking advantage of the new mega ships, are now combining their cargo, so as to have larger volume deliveries of containers, but fewer ship calls. More containers, delivered at once, stresses capacity of the terminal operator to move the containers through the gates.
    • Chassis—(the trailer on which the ocean container is placed and then hauled out the gates). Ocean carriers have traditionally, in the US, owned and maintained the chassis. The carriers are discontinuing this. Chassis are now the responsibility of truckers, shippers and others. During this transition there has been confusion and a shortage of chassis. To solve the problem, some shippers are buying and maintaining their own chassis. The Port of Long Beach is acquiring 3,000 chassis to have available for shippers through that Port. Other solutions will be implemented over the coming months/years. In the meantime, like the mega-ships, all parties need to work constructively to try to make the best of the situation.

WHERE ARE WE NOW?

The finger-pointing between the PMA and the ILWU is intense; and exporters and importers are not being spared the increasing damages, losses, missed delivery deadlines, unhappy overseas customers, waiting trucks, rejected cargo, and layoffs.

The long term impacts are becoming evident: for exporters – permanent loss of foreign customers who are looking for food, farm and fiber sources in other countries. For importers – hearing accelerating plans to permanently revise supply chain, reducing dependence on US West Coast ports, increasing shipments via Canadian and all-water (Panama and Suez) to the East/Gulf Coast ports.

The future impact to all West Coast states is in flux. How will the rest of the world react to the unreliability of our ports? Are our international customers looking for another source for their feed, food and fiber? Will other industries (airplane and car parts, shoes, retailers, etc…) move their warehouses and distribution sites towards the East Coast and Gulf Coast to be closer to more a more reliable port system? They already are. There’s chatter out there of the East Coast terminals and ILA (International Longshore Association) asking for that business. If this happens, then where will we get empty containers? How much more will it cost to ship off the West Coast and will we be competitive in the global market? How much will the landscape of Oregon and America change? All of these questions remain to be answered. One thing is for certain: the longer these disruptions continue, the more at risk we are.

Things are moving fast these days. On Thursday (February 12) morning, 359 Oregon companies, farms and associations wrote a letter to the Oregon Congressional Delegation asking for intervention in the West Coast Port Crisis. Also on Thursday, many Congresspeople hosted a Press Conference on this subject. (See Congressman Kurt Schrader’s comments here). By Friday morning, all 5 US House Members from Oregon sent a letter to the President urging his active and immediate engagement, including using statutory authorities accorded to the Chief Executive as necessary. Friday afternoon, US Senators Jeff Merkley and Ron Wyden wrote a letter to the ILWU/PMA strongly urging both parties to immediately resume port operations at full capacity while the final issues are negotiated. Finally, Friday afternoon, President Obama announces he will send his Secretary of Labor to the negotiation table. This doesn’t necessarily mean a signed contract is immediately imminent, but the last week showed more media and political involvement then we’ve seen in the past 9 months combined. I’m hoping it’s a sign that we are moving in the right direction.

AgTC: Statement of the Agriculture Transportation Coalition

To anyone reading this blog, this is a fantastic statement by the AgTC to explain the current situation between the ILWU/PMA, the struggles that Agriculture has and will continue to have, and the outlook of the West Coast ports depending on how these negotiations go. -Shelly

AgTC: Statement of the Agriculture Transportation Coalition
Initiation of Federal Mediation of West Coast Port Contract Dispute

January 6, 2015

Contact: Peter Friedmann, Executive Director, executivedirector@agtrans.org

Abigail Struxness, Program Manager, abigail@agtrans.org

202-783-3333

www.agtrans.org

The AgTC appreciates that the Federal Mediation and Conciliation Services has now undertaken to help the International Longshore and Warehouse Union (ILWU- representing the longshore workers) and Pacific Maritime Association (PMA- representing the marine terminal employers) resolve differences. FMCS Press Release. This is an essential step, as the injury caused by port labor slowdowns, walk-offs and disruption has rendered West Coast ports dysfunctional. Months ago exporters and importers asked the White House to get involved. The result of the West Coast port disruption over the past 6 months has been hundreds of millions of dollars of lost sales, cargo damage, and lost customers to US agriculture, manufacturers, farmers, and retailers, not to mention lay-offs in each of these sectors. This disruption and injury continues today.

The AgTC seeks from this Mediation, not just any new contract between the ILWU and PMA. While that would provide temporary relief, it would not lead to improvements in port operations that are essential to meet the challenges facing west coast ports and the importers and exporters dependent upon them. The AgTC presented to the President of the ILWU and the PMA a comprehensive list of what’s at stake for West Coast ports, as negotiations began last year. Those challenges are still very much in play as the Mediation begins. Open Letter to the ILWU and PMA.

The Agriculture Transportation Coalition’s membership includes companies that represent virtually all agriculture and forest products exported from the United States, as well as imports of these products. These products are grown, raised, processed, packaged and shipped from all regions of the U.S. to markets worldwide, where they typically face competition from similar products sourced elsewhere. The AgTC was founded on the following principle: “There’s nothing that we produce in agriculture and forest products in this country, that cannot be sourced somewhere else in the world. If we cannot deliver affordably and dependably, those foreign customers will find alternative sourcing, and it may never come back to the US suppliers.”US agriculture requires efficient West Coast ports if we are to compete with agriculture producers in Brazil, Mexico, Canada, Australia, Chile, etc. in selling to the Asia markets. When US marine terminals are shuttered, and when lack of automation (which is standard at world-class ports outside the US) renders our terminals slower and undependable, then agriculture, which depends upon these ports for access to world markets, suffers great and permanent loss.

For our US exporters and importers, continuing West Coast port disruption and inefficiencies, unless rectified, are already leading to two very bad results – neither in the interests of US exporters, importers or the US economy as a whole. Unfortunately, both have been very much in evidence and accelerating over the past year:

  1. Supply chain managers are forced to divert cargo to East and Gulf US ports and/or to Canadian ports (more detail provided in the Open Letter.) Much of this diversion is now permanent and will not come back to the West Coast ports even after the current dispute is resolved.
  2. Foreign customers are forced to shift their purchases of hay, apples, cotton, lumber, citrus, meat, dairy, almonds, etc., to suppliers of the same products located in other countries.  This too has been occurring with increasing frequency, and are often permanent. For example, when the west coast ports were shut down 12 years ago, Japan candy producers were forced to shift purchases of almonds from California growers, to Turkey, and some of that business still has not, and likely will never come back to the US.

So we hope the  ILWU  is not entering this mediation with the objectives of increasing cost of  port labor (already the highest in the world; according to published contract terms, ILWU workers make an average of $147,000/year, with full medical – no copay, no deductible, no limit, plus pension, etc.), preventing full automation of the terminals, maintaining antiquated practices such as the hiring hall and closing terminals during lunch hours (long discarded in all other industries), and now expanding these costs and inefficiencies to chassis maintenance and repair.

If the ILWU is successful in achieving these objectives during the current mediation, they will be successful in accelerating the diversion of cargo away from the US west coast ports, forcing foreign customers to stop buying from US farmers, growers, packers and food processors, driving cargo away from US west coast ports, and ultimately denying their own children the good jobs at the terminals.

One of the key issues that will be subject to the current mediation relates to jurisdiction over the chassis (these are the trailers on which the ocean cargo containers are placed) maintenance and repair.  This critical function simply cannot be handled in the same way that West Coast port operations have been handled over the years.

Following is a current, quite alarming report about chassis maintenance:

“Our company is one of many exporters trucking products to the ports of Los Angeles and Long Beach on a daily basis.  We have dealt with numerous issues pertaining to the current labor slowdown by the ILWU, costing us hundreds of thousands of dollars in lost sales and time wasted.  One recent problem we are experiencing is not only appalling, but amounts to outright theft.  We’d like to share our story.

About a year ago, we began making plans to start managing our own chassis program for our trucking operation, as we knew shipping lines would soon be getting out of the chassis business.  For years we had been reliant on equipment that was provided by the shipping lines as part of our service contract.  While the allure of a “free” chassis was appealing, in reality, we were spending approximately $70,000 per year on tire repair of port chassis.  As any trucking operation knows, the tires on port chassis are generally in poor condition, as each operator nurses the tires along just enough to get the container delivered, leaving any lasting problem to the next lucky recipient of that particular chassis.

In order to begin our chassis management program, we experimented with purchasing our own new chassis, as well as entering into a long term leasing agreement with one of the larger port chassis providers, in order to determine which type of equipment best suited our operation.  The equipment we purchased was in excellent condition, as everything was brand new.  In general, the leased port chassis were in good condition, except of course, for the tires.  Over the next few months we began replacing the “junk” recapped port chassis tires with other tires that while were not new, were in much better condition.  There was a great deal of expense incurred to conduct this project, however, we believed it would benefit us in the long run.  Sure enough, once this tire replacement program was complete, we saw a nearly 90% reduction in our tire repair costs.

Two weeks ago, one of our truck drivers was leaving a terminal in Los Angeles after picking up an empty container.  He was stopped at the exit gate by a terminal worker and told that his chassis needs to be inspected for safety purposes.  This particular chassis was one of the leased units we did not own, but have thoroughly maintained.  It also recently completed its annual inspection by the California Highway Patrol, and passed without incident.  However, on this day, it was deemed unsafe by this particular terminal worker and received an “OUT OF SERVICE” tag.  Our driver was instructed to report to the maintenance shop to receive replacement tires before being allowed to leave the terminal.  The maintenance shop, at their own pace, removed our tires, and replaced them with…you guessed it…”junk” recaps-the same type and quality we had spent months, and tens of thousands of dollars to replace.  In effect, they stole our tires from us.  Two days later, that same chassis had two blowouts, from tires that were replaced by the terminal.  So much for safety.

I wish we could report this as an isolated incident, however, in the last two weeks, this situation has repeated itself on numerous occasions.  At this rate, the terminal will have undone in weeks what it took us months to accomplish.  This is just one of many similar costly stories that goes unreported during this contract negotiation period.  Our industry cannot continue to operate this way.  Changed is needed…soon.”

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.

Why this affects you.

The current port crisis isn’t just an Agriculture issue – this is an Oregon issue, a Pacific Northwest issue, an American issue.

Ag picture

We are a couple decades removed from the general public knowing their local farmer, understanding the farmer’s plight, respecting the neighboring farm, and supporting the farm families. We – the general public – have simply become urbanized, and have lost touch with what happens outside the city borders – people have lost touch with what goes on in rural America, and in doing so, what it takes to provide the food on their table, the textiles that make the clothes they wear and the seed that they use to plant their lawns and gardens. Critics of modern production agriculture are pushing the negative idea that we are all “corporate farms”, but the U.S. Department of Agriculture (USDA) reports the vast majority of farms and ranches in the United States are family owned and operated – in fact, 93 percent of the 2.1 million farms in the United States are family owned (http://findourcommonground.com/food-facts/corporate-farms/). There are blogs going around that the wheat we eat is poison. Since when? From the words of my farmer friend Brenda: “I want to tell you a short story about how we check our wheat before harvest to see if it’s ready, and also during harvest to make sure that the moisture is right.  We grab a handful (with our bare hands) and we toss kernels into our mouths and we eat it.  This practice has been done for generations.  My grandpa ate wheat straight from the field, straight from the combine, my dad has, and I do as well.  You would think that if anyone is going to come away from this whole conventional wheat experience with a toxic disease it would be us…but we don’t.  We are all healthy as horses, because what we are growing is safe and healthy.  Now I know as much as anyone that this isn’t scientific, but it does show how much we trust what we are doing out here in the fields.” (For more information on this topic, see: http://nuttygrass.com/ or http://prairiecalifornian.com/truth-toxic-wheat/)

Agriculture is important to us as Oregonians and as Americans. From the words of our Governor Kitzhaber: “Agriculture remains one of Oregon’s economic bright spots, creating about 1 in 10 Oregon jobs, with a $5.4 billion production value equal to roughly 15 percent of the state’s economy. There is tremendous diversity in what we grow, with more than 220 different commodities produced under some of the best growing conditions you’ll ever find. That array of crops, livestock, and fisheries strengthens our agricultural economy, which strengthens all of Oregon. But our agriculture sector is more than numbers, it’s also about what makes this place so special – our open spaces, vistas, greenery, and sustainable natural resources. Those Oregonians who have chosen to raise our food and fiber deserve our gratitude and support, and I ask that all Oregonians join me in thanking them for their incredible contribution to our state.” Well, Governor, you’re welcome.

Teaching the girls how to de-bud hazelnut trees

Teaching the girls how to de-bud hazelnut trees

What does that mean in a nutshell? JOBS. The opportunity for Oregon’s Agriculture and it’s affect on the economy is exciting – if we can allow it to happen. Oregon agriculture has diversified into markets that are growing very fast… These markets offer the potential to revitalize an industry that is slowly being recognized as having an increasing role in Oregon economic future.* Agriculture… having an increasing role in Oregon’s economic future! More jobs, more revenue!

Okay, so we – Agriculture – we’re kind of a big deal. When we really look at it – Oregon’s Agriculture is NECESSARY for the continued strength of the state.

OR Ag important exports

Excerpt from Oregon Department of Agriculture presentation – click on to be linked to blog “Crisis on West Coast Ports”

But if we can’t get it to market, then what good is any of it?

We are on day 13 of a West Coast Port crisis. The hard-working (when they’re working) members of the ILWU at the West Coast Ports are stuck in a negotiation-tactic filled fight with the PMA (Pacific Maritime Association). Until this is resolved and a contract is finally filed, we are at the mercy of the Big Dogs. Our farm is fighting, our company is fighting, our straw-export industry is fighting, the Christmas Tree industry is fighting, the Washington Apple industry is fighting – we’re ALL fighting to stay alive, to continue business, to continue our ever-so-important relationships with our overseas buyers. Some of us might not survive this, and that is sickening.

Governor Kitzhaber, President Obama, members of Congress – you KNOW how important Agriculture is to this state, this country. Our history is filled with the stories of the American Farmer. At some point along the way, the American Farmer became two antithetical people – the adversary (see above in regards to “corporate farms” and “poisoning food”) but also the romanticized and commercialized icon of America.

God made a farmer_tractor

Think 2013 Dodge Ram’s Super Bowl commercial using Paul Harvey’s “So God made a Farmer.” If you haven’t watched the commercials, or read the entire speech – you should (See below for link). It’s amazing, and makes me tear up every time I read it and watch it – because it’s true. Farmers are special people choosing a lifestyle that’s not easy, bringing their family with them into the field, working long hours – all to get their product to market in order to survive another year.

Their product to market… Again, market. I’ve quoted this before, and I’ll quote it again:

“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”.

This state, this country, will have a different landscape if we 1- cannot get our product to market and 2- farmers are regarded as anything but supporters of America and caretakers of the land.

“Opportunities and challenges” is perhaps a cliché, yet it is a phrase that certainly fits Oregon agriculture today. Agriculture holds great potential to contribute to the solution, as long as the entrepreneurs and policy makers who recognize agriculture’s role as an economic engine in the past continue to acknowledge its even greater potential for the future.*

We need the support of our neighbors, our state, and our government to continue to provide food, jobs and revenue for the good of us all.

Watch So God Made a Farmer Video: https://www.youtube.com/watch?v=AMpZ0TGjbWE

*http://ruralstudies.oregonstate.edu/sites/default/files/pub/pdf/OregonAgEconomyAnUpdate.pdf