More trans-Pac service cuts on tap for October as carriers seek to buoy rates

THE Alliance’s suspension of a trans-Pacific service next month adds to the raft of canceled sailings and other service changes that ocean carriers have planned now through well into October as they attempt to better balance ship supply with import demand.


Hapag-Lloyd on Wednesday said the Pacific Northwest 3 (PN3) service it operates under its alliance agreement with Ocean Network Express, Yang Ming and HMM will be suspended following an Oct. 8 sailing from Hong Kong due to the “present market situation.” In place of the PN3 service, the carrier said its PN2 service would add calls to the Asian ports served by the PN3.


THE Alliance has already announced a series of service changes in September. Over the next three weeks, it plans to blank 12 sailings – two to the Pacific Northwest, five to Southern California and four to the US East Coast – accounting for nominal capacity of 119,000 TEUs.


The 2M Alliance partners Mediterranean Shipping Co. (MSC) and Maersk also announced this month that 11 trans-Pacific voyages scheduled between Sept. 25 and Oct. 9 will be blanked, accounting for 108,000 TEUs in nominal capacity. Those include four services to Southern California ports, six to the US East Coast and one to the Gulf Coast.


In addition, schedules from carriers of the Ocean Alliance show changes to sailing frequency or outright cancellations on 17 services through the end of October with nominal capacity of 146,000 TEUs. Cosco Shipping and Orient Overseas Container Line will offer fortnightly, in place of weekly, sailings on their 5,800-TEU Dahlia service to the Pacific Northwest through October. Evergreen Marine will also offer biweekly sailings on its 12,000-TEU Southwest Express Service to Los Angeles through October in place of weekly service.


Blankings will ‘get worse’ 


With Asian imports to the US down 20% year-to-date, the trans-Pacific is bearing the brunt of service cuts. Maritime consultancy Drewry’s canceled sailings tracker indicates that the trans-Pacific will account for 59 of 104 canceled sailings worldwide originally scheduled between mid-September and the end of October.



Drewry added that with service cuts and schedule changes coming fast, “shippers and (beneficial cargo owners) are advised to remain attentive, as these developments could potentially result in schedule disruption and delays in cargo movements.”


An import manager who oversees 10,000 FEUs in Asian imports, primarily through West Coast ports, told the Journal of Commerce she is seeing about 5% of her inbound volumes get rolled to later sailings due to the service changes. The source, who did not want to be identified, expects the increase in blank sailings through October will mean that shippers who have booked cargo for sailings that month will likely face more delays as capacity tightens.


“Some of the carriers are blanking a lot,” she said. “The second half of September is tough, but the first half of October is going to be a mess. It’s going to get worse before it gets better.”


James Caradonna, vice president at MCL-Multi Container Line, told the Journal of Commerce that the capacity cuts – most of which are in response to China’s Golden Week holiday – have managed to stem further slides in spot freight rates in the near term, while keeping ships full.


While spot rates are very fluid, he said current market levels of $1,600 to $1,900 per FEU to the US West Coast at least allow the carriers to break even, particularly as fuel costs begin to rise.


“Those rates are not bad in a historical context,” Caradonna said. “I think many carriers would be okay with having rates in that range.”



He estimates that vessel utilization to the Southern California ports is over 90%, with some cargo being rolled to the next available voyage, as schedule changes and blank sailings prompt shippers to go with the fastest and highest-capacity ocean services available. In contrast, load factors on ships to the Pacific Northwest are around 80% as cargo flow at Canadian ports returns to normal following labor unrest in July.


“Load factors to Southern California have not been terrible,” Caradonna said. “Capacity has been more constant to the Pacific Southwest than the Pacific Northwest.”


Vessels going to the US East Coast are also likely seeing utilization around 80% or sometimes lower, according to Caradonna. He said the lower usage reflects a shift of some import cargo back to the West Coast after the ratification of the longshore labor contract and concerns about delays at the Panama Canal. Spot rates to the US East Coast have fallen harder than those to the West Coast, and now hover around $2,300 to $2,500 per FEU.


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‘Rushed’ sourcing shift out of China prompts some reconsideration

SINGAPORE — “China plus-one,” “friend-shoring” and “reshoring” may be catchphrases of the day, with the underlying trends they describe being well-supported by macro-level trade data. But as sourcing shifts out of China due to risk mitigation and other factors, one thing is increasingly apparent: Moving production out of China is costly, even to the point of leading some to reconsider it.


The reality is that for any number of product categories, relocating sourcing brings with it less efficient logistics, occasional lower quality, and overall higher costs at a time when cost control is rapidly assuming a higher priority for shippers.


That is why some executives with long experience in Asia logistics believe that if factors like risk mitigation were to recede as an urgent supply chain priority — for example, if there were to be a de-escalation of geopolitical tensions — China could, at least in the short term, recapture lost manufacturing given the well-established efficiency and quality of its overall system.


“The short-term rush out of China has in some cases been too rushed and infrastructure/cost and capabilities were not ready to absorb the business from China and thus if there were immediate changes in China; some of that would likely come back as an interim step,” said a senior Asia-based forwarding executive.


However, “two to three years more of fixing the bugs in the new countries will make that reversal much less likely,” he added, reflecting a view that diversification of supply firmly remains a long-term trend.


Still, it’s not happening without bumps in the road. According to anecdotes shared with the Journal of Commerce by a freight forwarder, such frustrations led a white goods manufacturer who had a pre-COVID sourcing split of roughly 40% Thailand, 33% Vietnam and 17% China to “actually (go) back to China for a significant amount of sourcing.”


Three specific reasons were cited: a more dependable supply chain for raw materials and parts, less tangled transportation solutions out of Asia, and sourcing capacity – especially following the surge in demand during the pandemic.


Issues in Vietnam led a footwear and apparel maker to acknowledge the pain associated with transitioning from a 57% China/29% Vietnam split to 45% China/35% Vietnam today. “Ocean capacity is a major issue,” for the shipper, the forwarder said.


“From a transportation and lead time angle, [the company was] much better off in Xiamen, which can boast over five times [the] direct call capacity than Haiphong.”


A seller of artificial Christmas trees, meanwhile, was sourcing 93% of its product from China as of 2019, but as of 2023 is sourcing 58% from China and 41% from Cambodia. However, the forwarder said, “they do not see a further shift away from China as they also cited capacity and supply chain efficiencies from China were still far superior than those in Cambodia.”


“Not surprisingly, priority [purchase orders] … are still coming from China as they do not have enough confidence that the factory, infrastructure or transportation options from Cambodia can deliver consistently,” the forwarder source added. “Also worth noting that as a result of the shift, this particular importer has had to push up its shipping program for Christmas trees, and rather significantly at that.”


Sourcing shift comes with new costs 


study prepared for the annual US Federal Reserve Jackson Hole Symposium held from Aug. 24-26 found that moving production out of China brought additional cost.


“Decreases in product-level import shares from China are associated with rising unit values for imports from Vietnam and Mexico, which likely reflects rising costs of production in these locations,” the study concluded. “This ongoing reallocation of global supply chain activity comes attached with costs that need to be monitored and assessed more rigorously.”


Part of the additional cost stems from less-efficient logistics, including fewer direct connections that result in more frequent transshipments, as well as chronically congested terminals and inland connectors. Sources say companies buying from factories are likely to experience more problems than large industrial companies that make a long-term commitment to a new market by establishing their own production and associated supply chains.


Part of the underlying issue is that transportation infrastructure is well known to be far less developed throughout Southeast Asia, even if it’s expanding rapidly across the region. According to maritime consultancy Drewry, as of 2022, 76 container terminals in China were able to handle ships greater than 14,000 TEUs, while there were only 31 across south and southeast Asia. China is the only country in the world to have built significant container port capacity ahead of demand, while in other developing countries new terminals fill up almost immediately after they open.


One example of divergent levels of efficiency is berth productivity, measuring how quickly terminals load and offload ships. China and Singapore have the most productive ports in the region, with ports in other countries, including the Philippines, Myanmar and Bangladesh generating substantially lower productivity, contributing to vessel delays and larger supply chain disruption, according to Port Performance data from S&P Global, parent company of the Journal of Commerce.


“Building redundancy into supply chains isn’t costless,” economist Marc Levinson, author of The Box and a scheduled TPM24 speaker, told the Journal of Commerce. “If a manufacturer makes a product in two or three countries rather than in one location, it may lose economies of scale, and its supply chain logistics get more complicated.”

Western Canada port backlog to take weeks to clear: Canadian National

Canadian National Railway said it would take up to eight weeks to clear the cargo backlog from the 14 days of strike action at Western Canadian ports amid a weaker-than-expected peak season, while signaling some confidence that the longshore disruption is over as union members vote on the tentative deal reached last week.


“We are pleased to see an end to the work stoppage and we’re working hard to get those supply chains back in sync,” CN CEO Tracy Robinson said Tuesday during a second-quarter earnings call. “We expect to move most of the volumes that didn’t move during the first two weeks of July over the coming weeks.”


The result of the ratification vote by the rank and file of the International Longshore and Warehouse Union (ILWU) Canada isn’t expected to be released until Saturday at the earliest, according to two people close to negotiations. The last three weeks have been marked by the whiplash of a 13-day strike, a tentative deal rejected by a union caucus, a one-day wildcat strike, a federal labor board ruling the one-day strike illegal, the union issuing and then retracting a strike notice for last weekend, and finally union leadership accepting terms of the new contract.


Those terms have not been publicly disclosed.


Beyond the strike impact, Doug MacDonald, chief marketing officer at CN, said on the call the environment for intermodal volumes, both domestic and international, will stay challenging. Pricing for domestic rail through the shipment of 53-foot containers on short-haul lanes “will be under pressure” due to increased truck availability, he added.


MacDonald was the latest transportation executive in recent weeks to downplay the possibility of any meaningful peak season, saying the railroad downgraded its outlook for intermodal volume growth due to shippers saying they’re expecting a weaker-than-expected second half. CN shipments via international containers and 53-foot containers fell 11% year over year in the three months ended June 30, pulling down intermodal revenue 26% to C$983 million (US$743,600).


“We’re not really sure what’s going to happen in [the 2024 first quarter] and beyond,” MacDonald said, answering an investor question on whether there would be a volume rebound early next year. “But what we are doing is we’re kind of forecasting a normal year beyond that, and that’s as far as we’ve gone based on what the customers have told us.”


The timing and health of an intermodal volume rebound on CN’s network hinges on the North American consumer, Robinson said during the earnings call, during which the Class I railroad reported net income of C$1.17 billion for the second quarter, down 12% from the same period in 2022. While CN doesn’t expect a significant restocking of retail inventories ahead of the winter holidays, Robinson said “we are expecting to see some strength start to grow and return to more normalized level, say next year.”


Similar to CN, forwarder Kuehne + Nagel downplayed the chances of a traditional peak season for ocean markets, with CEO Stefan Paul telling investors Tuesday that at best “there will be a slight uptick in the fourth quarter.” Last week, Matson Navigation CEO Matt Cox said he sees a “muted peak season” for the trans-Pacific, according to the company’s preliminary earnings statement.


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Western Canada port strike ends after sides reach deal on tentative four-year contract: source

The 13-day longshore strike that hit the Western Canadian ports of Vancouver and Prince Rupert has ended after the International Longshore and Warehouse Union (ILWU) Canada and waterfront employers reached a deal on a tentative four-year contract, a source close to the matter told the Journal of Commerce Thursday.

The end of the strikes comes less than two days after Canada’s Minister of Labour ordered the federal mediator overseeing negotiations between the union and the British Columbia Maritime Employers Association to provide recommendations for a settlement.

An official at BCMEA confirmed the deal and the end of the strike, which began July 1.

The strike caused multiple ships to divert from Western Canada to Seattle and Tacoma, while creating a vessel backlog off Vancouver and Prince Rupert. There were 14 container ships at anchor or offshore at the Port of Vancouver Wednesday, according to the port’s website.

US imports building toward August peak, but labor concerns weigh: retailers

US containerized imports are expected to build toward an August peak and in November will likely record the first year-over-year increase since June 2022, a major retail group said Friday. And while that is cause for optimism, the National Retail Federation (NRF) noted that labor strike at Western Canadian ports and involving UPS and the Teamsters could still snarl US supply chains this summer.


“We were relieved that labor and management at West Coast ports reached a tentative agreement last month but that doesn’t mean supply chain disruptions are over,” Jonathan Gold, NRF’s vice president for supply chain and customs policy, said in the group’s monthly Global Port Tracker (GPT), compiled with Hackett Associates.


Gold said the ongoing longshore strike at the ports of Vancouver and Prince Rupert should not have a “major impact” in the US but could still affect some retailers who move merchandise through Western Canada. And a possible strike by the Teamsters against UPS could crimp the ability to move goods from US ports to stores, he said.


“We urge all parties in both negotiations to get back to the table and continue efforts to reach a final deal without engaging in disruptive activity,” Gold said. “Seamless supply chains are critical for retailers as we head into the peak shipping season for the winter holidays.”


Diminished prospects for recession


According to the GPT, the prospects for a recession in the second half of the year are dimming and imports should increase as consumer demand ticks up and retailers reduce the inventory overhang that has kept warehouses full over the past year.


Consumer demand is stable, and consumers have continued to spend while retailers and wholesalers have reduced their inventories, Ben Hackett, founder of Hackett Associates, said in the GPT.


US imports grew at record or near-record monthly levels in 2021 through the summer of 2022 before growth stopped abruptly in the fall of 2022. GPT is forecasting that monthly year-on-year declines in imports will diminish over the coming months, with imports showing positive growth in November, which would be the first such reading in 18 months.


Retailers forecast that July imports will show a year-on-year decline of 11%, with August down 10.1%, September 3.4% and October 1.8%. Expected imports of 1.88 million TEUs in November would be up 5.9% from November 2022.


The GPT surveys imports at 12 major US ports on the West, East and Gulf coasts. It does not include imports through Vancouver and Prince Rupert, but NRF noted Friday the Western Canadian ports handled over 185,000 TEUs in May, approximately 9% of combined US-Canadian containerized imports at the ports covered by the GPT.


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Shipping industry braced for extended strike at BC ports


The container shipping industry in Western Canada is bracing for the possibility of an extended strike at the ports of Prince Rupert and Vancouver after longshore workers went on strike Saturday morning as threatened over a contract dispute.


The ports are adjusting operations to mitigate cargo buildup as both sides remain far apart on how to best fill existing heavy-duty maintenance jobs and whether the union’s remit should expand to other types of maintenance jobs at facilities, according to two sources close to the matter.


The Canada affiliate of the International Longshore and Warehouse Union and waterfront employers also face a wide divide on what they’ll accept in salary increases, paralleling the major stumbling block US West Coast employers and longshore labor finally overcame in announcing a tentative deal on June 15 after more than a year of negotiations.


Canadian shippers moving cargo through the British Columbia ports have few options for diversions. The US West Coast longshore union on Thursday signaled its solidarity in a letter to its Canadian counterpart. The International Longshoremen’s Association, which handles cargo on the US and East Coasts, went a step farther, pledging Wednesday to not handle any diverted cargo from Vancouver and Prince Rupert. Through connecting rail networks, US importers and exporters also ship goods through the British Columbia ports and have more alternative routing options.


After ILWU Canada workers began a strike at 8 a.m. Pacific time on Saturday, the Vancouver Fraser Port Authority said to mitigate backlogs it was adjusting how it directs and manages anchorage. For example, vessel anchorages in the inner harbor, where DP Centerm and GCT Vanterm operate, are now limited to 48 hours. Average rail dwell times at Vancouver marine terminals were under five days, according to port authority metrics, reflecting generally fluid cargo flow before containers stopped moving Saturday morning.


Late night bargaining sessions on Thursday and through Friday night between the Canada ILWU and employers, with from the assistance Federal Mediation and Conciliation Service, failed to produce a contract agreement to replace the one that expired at the end of March. The ILWU filed a 72-hour strike notice with the federal government on Wednesday.


Canadian West Coast employers locked out the ILWU for less than 24 hours in May 2019 after an impasse in contract negotiations. Semi-automation, centered on the then new rail project at GCT Deltaport, frustrated negotiations, and now color current talks due to the prospect of some level of automation at a planned C$3 billion (US$ 2.2 billion) Vancouver terminal, Robert Bank Terminal 2.


Federal Labor Minister Seamus O’Regan on Saturday tweeted that mediators were still at the table, adding that the Trudeau government “cannot emphasize this enough — the best deals for both parties are reached at the table.”


All eyes on Ottawa 


The government took a similar approach in 2021 to Montreal port strikes, signaling support for both sides to work out their differences through negotiation and praising the merits of collective bargaining.  Parliament passed back-to-work legislation after four weeks of sporadic port disruption at Montreal, ending the strike and forcing an arbitrated contract.


With Parliament out of session and unable to potentially pass back-to-work legislation, the pressure is on the Trudeau government to use its political capital to force a deal between ILWU Canada and the British Columbia Maritime Employers Association. Prime Minister Justin Trudeau is generally viewed within the Canadian shipping industry as having acted too slowly — and weakly — when containerized supply chains were significantly disrupted over the last three years.


The stakes are high this time, given the size of Vancouver and Prince Rupert, the country’s largest and third-largest ports by volume, respectively. Vancouver and Prince Rupert handle more than C$800 million (US $604 million) in trade daily, equating to a quarter of all of Canada’s trade in goods, according to the BCMEA.


Canadian industry on Wednesday urged the government to act, though, it expressed its support for collective bargaining. Canada’s supply chains are already fragile and the strike will ripple through agriculture to manufacturing industries, while consumer and businesses grapple with inflation, wrote Robin Guy, vice-president and deputy leader of government relations at the Canadian Chamber of Commerce and David van Hemmen is vice-president at the Greater Vancouver Board of Trade.


“We are seeing signs that goods destined for Canada are already being routed to other ports, adding costs and increasing the environmental footprint of trade, all to Canadians’ detriment,” the duo wrote in the Globe and Mail.


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ILWU, US West Coast employers reach tentative deal on new six-year contract

Maritime employers and the International Longshore and Warehouse Union (ILWU) late Wednesday announced they had reached a tentative agreement on a new six-year contract covering all 29 ports along the US West Coast.


The deal, subject to ratification by both parties, ends 13 months of contentious negotiations marked by on-again, off-again job actions that disrupted port operations on the coast and diverted growing volumes of cargo to the East and Gulf coasts.


“We are…pleased to turn our full attention back to the operation of the West Coast ports,” the ILWU and Pacific Maritime Association (PMA) said in a joint statement, noting the new deal “was reached with assistance from Acting US Secretary of Labor Julie Su.”


The statement said the parties would not release details of the tentative agreement “at this time.”


The contract ratification processes normally takes at least one month.


“…The tentative agreement delivers important stability for workers, for employers, and for our country’s supply chain,” Su said in a statement.


The joint statement implies that the job actions that began last fall, such as the refusal of some ILWU locals to dispatch sufficient labor in key job classifications or the late dispatching of dockworkers, would come to an end.


Talks were entering critical phase 


Entering this week, sources told the Journal of Commerce the negotiations had entered a critical phase in which the talks could go either way – a tentative settlement by the end of the week or a possible strike or employer lockout. The importance of this week was demonstrated by the arrival of Su in San Francisco on Monday following a week of labor actions that disrupted port operations up and down the West Coast. Su, after meeting with the ILWU and PMA on Monday, has stayed in the Bay area since, remaining on call as needed.


The deal will be met with relief from shippers and retail groups, who expressed constant dismay at the port disruptions and diversion of cargo away from the West Coast over the past year.


Uncertainty over the reliability of West Coast labor has had a devastating impact on the region’s market share as retailers diverted a large volume of discretionary cargo to the East and Gulf coasts. The West Coast’s share of US imports from Asia declined from 62% in January-May 2021 to 58.6% during the first five months of 2022 and 56% through the first five months of this year, according to PIERS, a sister product of the Journal of Commerce within S&P Global.


“The supply chain and economy will benefit greatly from this new contract, and the San Pedro Bay’s role as the most important gateway for trans-Pacific trade will be enhanced,” Mario Cordero, executive director of the Port of Long Beach, tweeted Wednesday night after the deal was announced.


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LA-LB vessel backlog cleared as West Coast negotiators remain at bargaining table

Bill Mongelluzzo, Senior Editor | Jun 9, 2023, 3:10 PM EDT


A vessel backlog that developed earlier this week at the ports of Los Angeles and Long Beach amid a lack of longshore labor was cleared Friday, a sign that progress was being made in coastwide contract negotiations between the International Longshore and Warehouse Union (ILWU) and maritime employers.


Talks between the ILWU and the Pacific Maritime Association (PMA), which represents ocean carriers and marine terminals, continued in San Francisco Friday for a third straight day. That in itself was another positive indicator, sources said, with negotiations hitting the 13-month mark this weekend.


Sources said the normal complement of workers – known as “lashers” — who secure the top row of containers on a vessel was dispatched Thursday night and early Friday in Los Angeles and Long Beach, allowing ships to be worked without disruption. The ILWU locals in Southern California refused to dispatch sufficient lashers earlier this week, causing delays that resulted in a backlog of vessels.


“It’s good today,” a source close to vessel operations in Los Angeles-Long Beach said Friday. “Our labor (orders) were filled last night and today.”


Disruption continues in Seattle, Tacoma 


Kip Louttit, executive director of the Marine Exchange of Southern California, said the backlog of container ships that were forced to slow-steam or stop at anchor had cleared by the day shift on Friday. Four vessels scheduled to arrive by midday Friday would most likely go directly to berth, Louttit said.


Cargo handling in Oakland, meanwhile, was normal for a second straight day.


“The Port of Oakland’s marine terminals are open and operating normally (Friday),” a spokesperson for the port said in a statement to the Journal of Commerce. ”The number of vessels waiting for a berth in Oakland is five, which is about average.”


Operations at Seattle and Tacoma, however, were “still bad” Friday, another source said, as job actions by dockworkers continued. Crane productivity at the Port of Seattle, which plunged to less than 10 percent of normal this week and was only slightly better in Tacoma, remained exceptionally poor on Friday.


The PMA said in a statement Friday that Seattle and Tacoma “continue to suffer significant slowdowns as a result of targeted ILWU work actions.”


The ILWU declined comment.


The fact that the ILWU and PMA held contract negotiations Friday for the third straight day is viewed by sources with knowledge of the talks as a positive sign. In recent weeks, the two sides had been meeting about once per week and were reportedly making little progress, which was demonstrated by the cargo-handling disruptions launched last week by ILWU locals that were intended to pressure the PMA into making concessions on wages.


The two sides have been far apart on the wage issue, with the ILWU reportedly demanding an almost 100% increase in the straight-time hourly wage, with the PMA’s offer said to be in the low single-digits.


“Even though some port operations have improved, the ILWU’s repeated disruptive work actions at strategic ports along the West Coast are increasingly causing companies to divert cargo to more customer-friendly and reliable locations along the Gulf and East Coasts,” the PMA said in its statement. “It is difficult to win back cargo once it’s diverted.”

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USWC disruptions continue as ILWU flexes power amid wage, manning gap with employers

US West Coast longshore labor is flexing its power to seek significantly higher wages and manning changes that would put two workers rather than one on some port equipment, sources said Monday, continuing a fourth day of disruptions at some marine terminals.


Several container terminals were hit with job actions in Seattle, Long Beach and Los Angeles on Monday, according to sources. While the severity of port disruptions on Monday was less than on Friday when dockworkers shut down a number of terminals along the coast from Long Beach to Seattle, the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) are still far apart on salary and manning levels, according to four sources close to the negotiations.


One operator at a Los Angeles marine terminal said he didn’t receive any of the labor he requested from the ILWU hiring hall on Monday, adding, “We probably will idle the ship today.”


A spokesperson for SSA Marine said labor gangs working four vessels in Seattle were fired on Monday because of low productivity on the cranes. SSA, which operates three terminals in Long Beach, said two of the terminals there have not worked an international ship since Saturday.


The sporadic ILWU job actions that continued over the weekend have included slowing down ship-to-shore crane productivity from the normal 25 to 26 lifts per crane per hour to about 20 lifts per hour, or even lower.


The PMA slammed the ILWU in a statement Monday for continuing “concerted and disruptive work actions.”


“Union leaders are implementing many familiar disruption tactics from their job action playbook, including refusing to dispatch workers to marine terminals, slowing operations, and making unfounded health and safety claims,” PMA said. “The ILWU’s coast-wide work actions since June 2 are forcing retailers, manufacturers and other shippers to shift cargo away from the West Coast in favor of ports on the Atlantic and Gulf coasts. Much of the diverted cargo may never return to the West Coast.”


The ILWU declined to comment. But the International Longshoremen’s Association (ILA) issued a statement saying it “stands in solidarity” with the ILWU, claiming the union has been “disparaged by the PMA through a calculated media campaign designed to boost its contractual leverage at the expense of West Coast dockworkers.”


Spokespersons at port authorities said most of their terminals that were affected Friday and over the weekend received full labor allocations for Monday’s day shift.


White House monitoring situation


During a briefing Monday, White House Press Secretary Karine Jean-Pierre said the Biden administration was monitoring contract negotiations closely and pointed to both sides tentatively agreeing on undisclosed “certain key issues.” The White House was “going to continue to encourage all parties to work in good faith toward a mutually beneficial resolution that ensures that workers get fair benefits, equality of life and the wages they deserve,” Jean-Pierre said.


The job actions taking place on the West Coast in recent days prompted the National Retail Federation (NRF) on Monday to send its third letter to the Biden administration urging federal intervention in the negotiations between the ILWU and the PMA, which represents shipping lines and terminal operators, since the coastwide contract negotiations began in May 2022.


“As we enter the peak shipping season for the holidays, these additional disruptions will force retailers and other important shipping partners to continue to shift cargo away from the West Coast ports until a new labor contract is established,” David French, the NRF’s senior vice president of government relations, said in a letter to the Biden administration. “It is imperative that the parties return to the negotiating table. We urge the administration to mediate to ensure the parties quickly finalize a new contract without additional disruptions.”


Union seeking significant salary hike


Negotiations are said to be hung up over an unprecedented demand by the ILWU for a wage increase of $7.50 per hour for each year of the proposed six-year contract, which would increase longshore wages by close to 100% over the life of the contract. Two sources close to the talks confirmed the union’s wage demand.


By comparison, wage increases over the past 20 years have been in the range of 50 cents to $1.50 per hour for each year of the contract, according to the PMA’s annual report.


The ILWU is looking to take advantage of the record profits carriers booked in 2021 and 2022 amid pandemic-induced disruption in the global supply chain that came amid historic import levels from Asia and massive consumer spending. But those profits have since diminished as the ocean shipping market returned to normalcy with consumers pulling back on spending their discretionary income on merchandise.


The ILWU is also reportedly demanding that certain cargo-handling equipment, such as yard tractors, be assigned to two dockworkers. That has long been a practice with ship-to-shore cranes, which require a higher level of skill. Under the ILWU’s demand, two drivers would be assigned to each yard tractor, which means one longshoreman would work for four hours and get paid for eight, and the second longshoreman would work the remaining four hours of the shift and get paid for eight.


Another significant issue in the negotiations involves retroactive pay, sources say. In each contract negotiation, there has been an unspoken agreement between the PMA and ILWU that whatever wage increase is agreed upon in the new contract, it would be retroactive back to the expiration of the previous contract, a source told the Journal of Commerce. That means the PMA and ILWU have been operating under the assumption that the wage increase being discussed for the new contract would be retroactive to July 1, 2022, when the prior deal expired.


But with negotiations now past the one-year mark, the PMA has reportedly told the ILWU that retroactive pay will be off the table as of July 1 if a tentative contract is not reached by then, according to the source. That PMA strategy is designed to provide a sense of urgency so the ILWU will reach an agreement soon rather than dragging the negotiations out further, the source said.


Terminal operators told the Journal of Commerce that if ILWU job actions stopped and cargo handling went smoothly Monday, coastwide negotiations between the union and PMA would resume on Tuesday. But it’s uncertain if that will happen now.