Wednesday, May 21, 2014

On the Water Front

Shippers face uncertainty ahead of longshore contract negotiations.

Following unusually contentious East Coast negotiations in 2012 and 2013, complete with multiple threats of a strike, shippers are on edge heading into this year’s negotiation for a new West Coast contract to replace the current six-year longshore agreement that expires on July 1. As U.S. West Coast waterfront employers launched contract negotiations on May 12 with the International Longshore and Warehouse Union, many beneficial cargo owners who source their products in Asia are planning to ship through alternative gateways in the event of disruptions or a work stoppage.

Revising a supply chain involves the entire chain. Production must be started earlier in Asia. Vessel space out of Asia will be tight, especially to ports in Canada and on the U.S. East Coast. Trucking capacity at ports in Canada and on the East Coast will also be strained, whether it involves moving containers from the port to railheads in Canada, or moving containers from East Coast ports to warehouses in the region. Equipment must also be secured in a tight market.

Port congestion is another issue. New York-New Jersey and Norfolk are just now recovering from congestion experienced earlier this year, caused in part by the harsh winter on the East Coast as well as the impact of bigger ships on terminal operations. Now the East Coast ports will be expected to handle their normal back-to-school and holiday merchandise that begins moving in the summer months, as well as the cargo that is diverted from the West Coast.

Several shipper organizations have told their members to prepare for work stoppages as the expiration date approaches and in weeks after if, as expected, no agreement is reached by that date. Until July 1, the “no-strike” provision in the current contract prevents the ILWU from engaging in an organized, coastwide strike. Work slowdowns are more difficult to gauge, and they may or may not occur as the deadline approaches. And just to make things more interesting on the water “front,” East Coast longshoremen have been known to engage in sympathy actions in support of their cross-country brethren, spreading the labor pains from coast to coast.

Kirk Shearer
1-800-989-0054 x103

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