Labor stability key for mega-ships handling at US West Coast ports


LONG BEACH, California — With U.S. West Coast ports facing increasing productivity challenges as more mega-ships call their docks, it’s abundantly clear that labor stability is essential if the ports want to keep, and grow, their share of U.S. imports.

Shippers aren’t convinced the International Longshore and Warehouse Union and Pacific Maritime Association are doing enough not only to mend relations, but to improve the efficiency of cargo handling.

After listening to representatives of two shipper organizations express the same pessimistic view that labor and management learned little from the embarrassing port meltdown during the 2014-15 West Coast labor contract negotiations, ILWU International Vice President Ray Familathe assured importers and exporters the dynamics are going to change.

“I get what you’re saying. You don’t want excuses. You want results,” Familathe told the JOC’s 16th Annual TPM Confernce Tuesday in Long Beach.

The TPM conference heard from top officials of the ILWU, the PMA, the Office Clerical Unit of ILWU Local 63 and the shipping lines and terminal operators that negotiate with the OCU Their message was consistent: a reliable work force is needed at West Coast ports, beginning today. Equally as important, labor and management must cooperate to improve cargo-handling processes so the biggest ships calling in North America can be worked efficiently and consistently week after week.

If the ILWU and PMA truly fix the labor-management problems that have plagued the ports since 2002, they will have simply taken the first step in a complex process that is needed to reduce port congestion, said Peter Friedmann, executive director of the Agriculture Transportation Coalition.

If West Coast ports do not address port productivity immediately and effectively, the “drip, drip, drip” of cargo diversion to other ports will continue, he said.

Cargo interests feel betrayed by the PMA and ILWU. The organizations that represent importers and exporters met with management in the months leading up to the start of negotiations in May 2014. “We were assured nothing would happen. These disruptions should never have happened,” said Jonathan Gold, vice president of supply chain and customs policy of the National Retail Federation, which represents large, medium and small importers.

AgTC represents exporters of agricultural and forest products, many of whom are captive to West Coast ports because the value of their freight and thin profit margins dictate they can only export through ports close to the point of production. AgTC members told labor and management that the inability to fill orders due to labor disruptions could result in agricultural exporters losing overseas customers for life. Agricultural exporters ended up suffering more than any other shippers during last year’s port congestion, Friedmann said.

The overwhelming lack of trust in West Coast labor and management was graphically revealed in an electronic poll taken during a beneficial cargo owner panel at TPM. The poll revealed that 85 percent of the respondents do not anticipate any significant improvements going forward.

Labor and management leaders told three separate TPM panels they intend to prove those doubters wrong. ILWU International President Robert McEllrath, sitting next to PMA President James McKenna, said that if the PMA formally requests there be negotiations to extend the existing five-year contract beyond July 1, 2019, in order to convince customers there will be labor peace on the West Coast, he will present the request to his people.

McEllrath said the ILWU does not want a repeat of the 2014-15 negotiations. The union wants to win back the cargo that was lost and grow the cargo base further through efficient cargo handling. “We have to do a good job,” he said.

McKenna said the contract agreement that was reached on Feb. 20, 2015, and formally ratified in May, contains the elements needed to ensure labor peace and reduce unexpected work stoppages. The contract includes a new, objective arbitration process that will ensure neutrality in reaching decisions. The contract will promote labor stability and provides the foundation for improved cargo-handling processes, so a contract extension makes sense. “Look for the letter,” he told McEllrath.

Although the PMA lockout of the ILWU that followed work slowdowns in the 2002 contract negotiations, and the destructive work slowdowns and employer retaliation during the 2014-15 negotiations may seem to be unprecedented, they fit into an historical context in which a period of gut-wrenching change in the maritime industry is met by extreme measures by labor and management.

The introduction of containerization in the 1960s and 1970s was such a period, said Tony Scioscia, principal, Anthony A. Scioscia Management, an industry veteran of operations and labor relations for shipping lines and terminal operators the past 40 years. Fearing a significant loss of  jobs due to containerization, the International Longshoremen’s Association on the East Coast struck four times between 1962 and 1977. The ILWU engaged in a 130-day strike in 1971-72. “It was a tumultuous period,” Scioscia said.

Some 30 years later, the employer lockout of 2002 and the work slowdowns during the 2014-15 negotiations were reactions to the next wave of change in the industry, said David Arian, a commissioner on the Los Angeles Board of Harbor Commissioners who began working as a longshoreman in 1965. Arian later served as president of Local 13, the largest ILWU local on the coast, and also as international president.

Terminal operators are still in the process of implementing information technology systems and automation of cargo-handling machines. These advancements will eliminate some jobs but will create new work opportunities. Labor peace is possible if employers, beginning at the marine terminal level, work closely with the union and provide proper training so ILWU members can efficiently perform the work, he said.

Developing this partnership is a work in progress. It is playing out in Oakland, where ILWU Local 10, one of the most militant locals on the coast, continued to engage in job actions last summer over regional issues even as other ports were back at work.

Chris Lytle, the port’s executive director, has formed an efficiency task force comprised of shipping lines, terminal operators, ILWU locals, truckers, customs brokers, cargo interests and other port stakeholders. The task force, which meets regularly, is charged with developing measures to improve cargo-handling efficiency and reduce truck waiting time at the terminals, but there is also a heavy element of education involved.

The various industry sectors began to realize that they have little knowledge of or appreciation for the challenges that other sectors face, and how their individual actions affect others. “There were a lot of misconceptions,” Lytle said. The education process took some time, but now there is a level of trust in the harbor in which the ILWU local officials are not only cooperating more closely with the PMA, but also with the importers and exporters who rely on Oakland as their main gateway, he said.

Building upon that trust is key to taking the next step, which is to examine ways in which all members of the supply chain can cooperate to reduce bottlenecks so ports are facilitators of trade rather than impediments. Arian said this is where all West Coast ports must go now that the new contract is in place and labor peace is assured. “It’s one thing to have stability. It’s another to have efficiency,” he said.

Developing efficient cargo-handling involves stowage of vessels in Asia to expedite unloading at West Coast ports, consistent crane productivity against the vessel, increasing cargo velocity through the container yard, seamless transfer of containers to trucks and trains and creative measures such as container dray-offs and free-flowing of containers to off-dock yards. Arian said the ports are taking the lead in these efforts. They are moving beyond their traditional landlord roles and are becoming actively involved in helping the various stakeholders to collaborate across industry lines.

Even with this positive buzz on the waterfront, the maritime industry must address an albatross that continues to weigh heavily on port operations. During  the 30 years of peace and prosperity from 1972 to 2002, management and labor built “negative patterns,” Scioscia said. The industry fell into a pattern of costly contracts and inefficient work practices, a dangerous environment marked by expectations of escalating salaries and benefits even as productivity declined. This is not sustainable in an era of big ships and unprecedented cargo surges, he said.

Similar expectations arose in the office clerical sector of the industry. The OCU, with about 900 members, represents the office workers who process shipping documents that are crucial to the shipment of cargo to and through marine terminals. Like the cargo-handling sector, the OCU workers also feel threatened by computer technology that can be used to outsource work to non-union workers in other states and even other countries.

The OCU workers, while members of the ILWU, have a different contract from the dockworkers. In fact, the office workers have 20 individual contracts that present a level of complexity in negotiations unmatched in any other industry, said Stephen Berry, a partner in the employment law department of Paul Hastings LLP who represents employers in OCU negotiations.

This complexity resulted in marathon negotiations for the current contract. Those talks began in 2010 and continued for two and one-half years into 2013. The negotiations included an OCU job action that was honored by ILWU dockworkers, thereby shutting down cargo handling at a number of the terminals, and the dispatching of a federal mediator in Southern California.

“I was certainly determined to do it differently this time,” said John Fageaux, president of ILWU Local 63 OCU. The current contract does not expire until June 30, but negotiations are moving along quickly, and on Tuesday Fageaux announced that the 17th of the 20 contracts was signed.

As with the dockworkers, wages are rarely a sticking point in negotiations. “The OCU are the highest-paid clerical workers in the world,” Berry said. In an industry where information technology continues to advance, jurisdiction is a critical issue and that is a major focus of the negotiations. Successful conclusion of the process will give a big boost to stability as the contracts being negotiated will last for seven years.

Berry and Fageaux agreed that growth of West Coast cargo volumes depends upon labor reliability and efficiency of work process in the office clerical worker space, and that is where their efforts are pointed. “We have to do things differently. No one is going to tolerate disruptions,” Fageaux said.

This is also the direction in which the PMA and ILWU must head in the cargo-handling sector, Scioscia said. “We know what the problems are. We know what the fixes are. We must work together jointly on these issues,” he said.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihs.com and follow him on Twitter: @billmongelluzzo.

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