White House Keeping Distance from Critical Rail and Dockworker Labor Talks For Now

The White House is monitoring labor talks in the logistics industry as unions representing 115,000 rail workers and 22,000 West Coast dockworkers negotiate fresh contracts, but won’t get directly involved in either bargaining process now, its supply-chain envoy said.

“The administration is watching as closely as it can be watched without being a point of interference, which would not be appropriate,” Stephen Lyons said in a virtual briefing Wednesday. “Negotiations are at a place where you’d think the negotiation should be at this particular point.”

Labor impasses are spreading across the US logistics network in the busiest months of the year for shipping, as retailers stock up on back-to-school and year-end holiday goods. Dock- and railroad-worker unions are currently negotiating contracts with employers, with the latter threatening to strike as soon as July 18.

Talks between the nation’s largest railroads and workers — which started in January 2020 — are in a 30-day cool-off period after a union rejected a binding mediation offer from the National Mediation Board. Next, the Biden administration could appoint a presidential emergency board to resolve the dispute.

Rail Congestion Threatens Nationwide Logjam, LA’s Seroka Says

“We’ve got to get these folks some wage increases; we’ve got to address some of these issues,” Lyons said, adding he doesn’t want to get ahead of President Joe Biden as he makes a decision. “We’ll see what happens on the 17th. But I do think there’s a commitment there.”

Contract Discussions
Separately, the International Longshore and Warehouse Union and the Pacific Maritime Association, which represents about 70 employers, began discussing a new contract in May and are continuing to do so after their previous pact expired July 1. Officials from the ILWU and the PMA, which represents employers, met with Biden when he visited the Port of Los Angeles last month and have recently reaffirmed their commitment to keeping cargo moving despite the lack of a contract.

Any slowdown in operations at the two ports that are responsible for 42% of all containerized trade with Asia could stoke annual inflation that’s running at the fastest pace since 1981, and damp economic growth.

Biden, who’s pledged to be the most pro-union president in US history, has directed Cabinet members and logistics-area experts to smooth out pandemic-era port logjams that spurred shortages and delays. Lyons and Labor Secretary Marty Walsh have been in touch with both parties, the port envoy said.

Port of Los Angeles Kicks Off Peak Season with Record June

Meanwhile, about 70,000 truck owner-operators in California — home to the nation’s biggest port complex at Los Angeles and Long Beach — are now in limbo as a local gig-work law starts applying to them.

California’s Assembly Bill 5 requires workers satisfy a three-part test to be considered independent contractors, or else be seen as employees entitled to job benefits. The state’s truck owner-operators must now comply with AB5 after the Supreme Court on June 30 refused to review a case challenging the legislation that sets out the tests for employment-status classification.

‘So Critical’
On Wednesday, truckers demonstrated against the changes at the port gateways of Los Angeles, Long Beach and Oakland, according to the Harbor Trucking Association.

L.A. operations weren’t affected, and the port had planned for the protest days ahead Executive Director Gene Seroka said.

“We gave them the breadth and depth and space they needed to voice their opinions but kept this cargo moving; these drivers are very respectful of just that,” Seroka said at the virtual briefing Lyons also attended. “They have a message to put out there and are continuing to do so. I applaud them for coming out here today.”

The Biden administration is still assessing the AB5 issue in California, Lyons said.

“The truckers are so critical to their supply chain — we’ve got to make sure that we’re setting the conditions to take care of them to the best of our ability.”

China COVID rules make deep cuts in Hong Kong cross-border container volumes

Hong Kong faces losing all its cross-border container traffic with Shenzhen and Guangdong Province if Chinese authorities continue to impose COVID-19 restrictions on trucking and feeder operations, the head of Hong Kong’s terminal operators’ group has warned.

Jessie Chung, chairwoman of the Hong Kong Container Terminal Operators’ Association, said the volume of containerized exports trucked from Guangdong Province for shipment through Hong Kong port has slumped since February when China imposed COVID-19 controls on trucking and barge operators. The association represents four of Hong Kong’s five terminal operators, including Hutchison’s Hongkong International Terminals, Cosco-HIT Terminals, Modern Terminals, and Goodman DP World.

“The situation worsened in June and July,” Chung told JOC.com Tuesday. She said the volume of export containers transported by cross-border truck to Kwai Chung container terminal fell 48 percent in June and 58 percent in July compared with a year earlier.

Hong Kong government figures show a year-on-year average monthly drop of 60 percent in total freight imports by truck from South China, to just 400,000 tons between February and June.

Cargo volumes moved to Hong Kong by barge from South China show an average monthly drop of 24 percent to about 3 million tons since January compared with last year.

“We have to liaise with Shenzhen and Guangdong authorities, otherwise we will lose all our cargo,” Chung said.

But Chinese authorities have rebuffed attempts by Hong Kong government officials for an agreement to ease restrictions on cross-border truckers and barge operators.

“There have been numerous meetings and plenty of emails and other communication on the cross-border trucking and barge operation issues,” Roberto Giannetta, chairman of the Hong Kong Liner Shipping Association, told JOC.com. “But in terms of progress, we can say there is zero improvement.”

No incentive for China to ease restrictions

Under the controls introduced in March, cross-border truck drivers are banned, while container-laden chassis can only be picked up and dropped off at designated Hong Kong-Shenzhen border crossings. Barge crews must also live on their vessels for extended periods without shore leave.

“Shenzhen has everything to gain by maintaining the existing obstacles — cargo flow through Hong Kong is being shifted to Shenzhen ports,” a senior shipping executive told JOC.com. “There is, therefore, very little motivation for them to ease restrictions that would restore smooth transport of containers through Hong Kong port.”

Chung pointed out the district government in Nansha, about 60 miles west of Hong Kong, has recently introduced a raft of incentives to encourage shippers to move cargo through Nansha, part of the Guangzhou port complex. These include cash bonuses for shippers who move into the district and to firms who increase freight volumes, especially reefer cargo.

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