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

Tick tock, tick tock… Harvest is around the corner!

Baler_Word Swag

Where did the time go? I don’t know if you realize this, but it’s May 14th. And to us in Oregon and in the grass seed industry, that means harvest is right around the corner. So how did I get to middle of May and not realize it? Hmmmmm… let’s see…..

The WC Port Crisis began in November, and many think it is over and have moved on. For those of us truckers and exporters, we are very aware it is not over. (See my previous blogs on the subject if interested). The contract will be ratified on May 22nd we believe, but the congestion at Ports of Tacoma and Seattle as well as the remote container yard at Northwest Container Services is very real. Daily we still struggle with repercussions from the long-term slowdown. The cost to trucking companies, farmers, and exporters have been huge. Our “new normal” is right around the corner, and I wonder what that will look like for us Oregon farmers, trucking companies, and exporters.

Trucks Seattle 3

Trucks waiting in extreme congestion at Port of Seattle

The Oregon legislative session has been a nightmare. The anti-business, anti-rural, anti-agriculture consistent themes have been one that demands the average farmer, businessperson and Oregonian to speak out like never before. Read a friend’s perspective on this here at www.oregongreenblog.com. I personally have been to the state capitol 3 times to testify against the Low Carbon Fuel Standard, diesel emission regulations, and minimum wage public hearings. Here is another friend’s perspective on the Minimum Wage bills here at www.nuttygrass.com. Many, many more bills that are important to us farmers and small businesses: legislated pesticide usage, mandatory PTO, mandatory flexible scheduling, BOLI “cease and desist” bills, and more. Countless letters, phone calls, and emails have been sent speaking out about these and making sure my local representation knows my thoughts on these matters. If you are reading this outside Oregon and are shocked that we’re dealing with all of this at one time, I agree – it’s almost unbelievable. Lastly, a local measure, Measure 2-89 in Benton County wants to ban all usage of GMO in the county. If this passes, a terrible precedent will be set for remaining counties.

NoOn2-89logo@2x

I coached a local club volleyball team through BOSS Volleyball. Yes, I coach volleyball. And love it! The courts are actually laid in one of our straw barns. As soon as we get the straw out of this particular barn, the club comes in and lays “sport court”. 6 different teams practiced 2x/week every week. Throw in 1-2 tournaments on the weekends every month, and well suffice to say I was quite busy. My daughter Kyndall was on my team, and it was a great opportunity to spend extra time with her and watch her and her friends grow as athletes. If you want my opinion on athletics and coaching – it’s a dying breed of coaches that feel we are teaching kids how to become better adults through sports. So many people have lost site of this – parents and coaches alike, and competition sometimes gets in the way. I saw this at every tournament. If you can ever find the time to volunteer as a local coach, I urge you to do so. It is one way to help our kids become contributing members of society, instilling teamwork, attitude and hard work into their core. Pretty soon, it becomes natural to use this hard work and positive attitude into every avenue of their life. A win for all!

At the BOSS Barn

At the BOSS Barn

Community Outreach – near and dear to my family’s heart. We’re part of Adopt A Farmer program through the AgriBusiness Council. We bring 180 6th-graders from Memorial Middle School in Albany, Oregon, to our farm. We had 5 stations to show them different aspects of our farm and businesses: 1) My brother, Farmer Amos, showed the kids about straw storage and even let them run the hay squeeze! 2) A local farmer, Farmer Ryan Glaser of Mid-Valley Farms, showed the kids our hazelnut orchards and taught them all about Oregon’s Hazelnuts. 3) My dad, Farmer Stan, showed the kids all of our equipment – from windrowers and combines to tractors, spray buggies and balers. But, I think Coach the Dog stole the show on this station! 4) Our Operations Manager, Farmer Eric, took the kids through the mechanic shop – starting with the truck scales where they weighed themselves as a group all at once, and finished talking about tires – some of them twice the height of the kids! – with the help of Terry, our local Les Schwab guy! 5) The final station was mine – and I showed the kids how we press the bales, containerize them and ship them overseas to customers. I explained the opportunities and challenges of working in an international marketplace, but they were more concerned about the money from around the world laid out on the table! In case you didn’t know, kids LOVE money. 🙂

Farmer Amos talking about straw bales

Farmer Amos talking about straw bales

Farmer Eric weighing kids on the truck scale

Farmer Eric weighing kids on the truck scale

Farmer Ryan talking about Oregon Hazelnuts

Farmer Ryan talking about Oregon Hazelnuts

In addition to Adopt A Farmer, we are involved with the local Albany Chamber of Commerce, bringing out their Youth Leadership and Trades Academy programs for tours on our farm. Lastly, we are involved with the Oregon Women for Agriculture and work on many projects including this great advertisement rolling down our highways and biways! Our Boshart Trucking trucks proudly haul this trailer all over Oregon – the response to it has been awesome! We love promoting “almost everything starts on a farm or ranch!”

OWA wrap_Word Swag

Then there was this little thing called Farm Mom. I laugh at that, because truly it was a huge deal! I found out on April 16th that I was the NW division winner of America’s Farmers Farm Mom of the Year! I flew to St. Louis April 22-24, at that time a national online vote was started. I found out last Thursday, May 7th, that I had the most votes and became the National Farm Mom of the Year. I know it’s a funny title, but I honestly couldn’t have picked a better one – Farm Mom, my favorite two titles for my life. I wrote a little about this in my last blog: The Most Important Crop I Grow… My Children. Along the way, I met 4 incredibly impressive women: Amy Kelsay, a dairy farmer from Indiana; Megan Seibel, a wine-grape grower and cattle farmer from Virginia; Shelley Heinrich, a cotton farmer from Texas; and Sara Ross, a corn farmer and member of Common Ground. Sara also blogs – you should check out here: Sara’s House – farm to table to you. Meeting these women in person, along with past Farm Mom’s through phone and email, I’m very grateful to be part of one incredible group.

Farm Mom_Word Swag

So, that’s where my last 6 months went! And now we’re gearing up for 2015 harvest – my favorite time of year! Gearing up for it takes a coordinated effort, and we’re in the thick of it now! Ready or not, here we go! Bring it on!

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.