Cargo Business Newswire Archives
Summary for August 27 - August 31, 2012:

Monday, August 27, 2012

BREAKING NEWS

Retailers to ILA, USMX: Cargo could be diverted “within the next week”

On the heels of last week's news of stalled negotiations between shipping industry management and its labor force as the impending contract deadline between the two looms by September's end, retailers issued a warning that they could steer their inbound freight away from ports on the East and Gulf coasts in a matter of days if both sides don't get back to serious discussions while the corresponding holiday shipping season is supposed to be hitting high gear.

"We are facing a critical time," said Matthew Shay, president and chief executive of the National Retail Federation in a letter copied to International Longshoremen's Association President Harold Daggett and United States Maritime Alliance Chairman and CEO James Capo regarding the walkout by the former's group after three days at the bargaining table with management last week in Delray Beach, Florida.

"We understand and recognize that there are tough issues that need to be resolved. The issue will only be resolved, however, by agreeing to stay at the negotiating table until a final deal is reached," said Shay.

However, cargo diversions like those that occurred in 2002 when there was a waterfront labor lockout on the West Coast could occur again, he said.

"Failure to reach agreement will lead to supply chain disruptions which could seriously harm the U.S. economy," said Shay.

"Now that there is a real risk of disruption, most retailers using the East and Gulf Coast ports will be forced to executive contingency plans within the next week to meet in-store holiday deadlines. These plans carry great expense but they are necessary to avoid disruptions that will add costly delays to our members' supply chains," the NRF chief said.

The ILA and USMX re-engaged with their on-again, off-again negotiations in Florida in late July as both sides at that time claimed to their respective members that there had been "significant discussions" on "critical items of importance" and that "substantial progress" had been made over what each have referenced publically as the central issues that include terminal automation, chassis pools, wages, and benefits.

However, last week, the USMX released a statement regarding the broken-off negotiations as the employer group referred to ILA workers being "among the most highly compensated workers in the country, on average receiving $124,138 a year in wages and benefits, which puts them ahead of all but 2 percent of all U.S. workers."

The ILA's Daggett retorted in a statement that: "USMX fails to note that longshore labor cost amounts to between 3 percent and 4 percent of the shipper's total cost."

When the two sides might get back to negotiations is now unclear as the shipping industry reportedly girds for the possibility of a longshore labor that could stretch from Maine to Texas.

The NRF's Shay said that without the "certainty" of a "secure, long-term" longshore labor contract, retailers and other shippers "will surely reevaluate their supply chains and the short-term and long-term reliance on these ports."

 

Tuesday, August 28, 2012

CBN NEWS ALERT

Gulf Coast ports gird for Isaac

Cargo ports in Louisiana, Mississippi and Alabama have at least temporarily suspended operations in preparation for Hurricane Isaac, which has been upgraded to Category 1 status with sustained winds of 75 miles per hour as it is expected to make landfall by 7:pm EST today, according to the National Hurricane Center.

U.S. Customs and Border Protection field offices have reported the following seaports, airports and CBP offices in the Gulf region have suspended operations until weather conditions allow for resumption of services:

• Port of Pascagoula
• Port of Gulfport
• Port of Mobile
• New Orleans Airport
• Port of Morgan City
• Port of Gramercy
• Port of Baton Rouge
• Port of Morgan City

At the Port of New Orleans, container terminal operations have been temporarily suspended, however the local CBP office reports that it would "remain open for transactions with the exception of duty collections 8/28/12 and will resume full administrative capability when conditions allow."

Here is the link to the National Hurricane Center's Isaac updates: nhc.noaa.gov

 

Wednesday, August 29, 2012

Top Story

USMX wants to cap ILA's "container royalties"

The alliance representing shipping industry management on the U.S. East and Gulf coasts in master contract bargaining with the longshore labor force at ports there wants to place a cap on so-called "container royalties" that employers say rose to over $211 million in 2011.

Container royalties were initially implemented to protect International Longshoremen's Union members from any loss of work due to the advent of containerization and automation in cargo handling in the early 1960s, according to a statement issued by the United States Maritime Alliance on Tuesday.

"Today, thousands of workers who were not even born in 1960 – or in 1968 when container royalties were first distributed – continue to receive payments that in 2011 averaged $15,500 for ILA workers at the 14 East and Gulf Coast ports," the USMX said.

"Not all of that money ends up in the pockets of ILA members; their union gets 10 percent – $21 million last year – through a checkoff from each member's royalty payment" the employer group said.

The USMX contends the "dramatic increase" in the royalty payments are due to a decrease in the number of ILA workers and a corresponding increase in containerized tonnage that went from approximately 50 million tons in 1996 to 110 million tons in 2011, resulting in payments that totaled $1.4 billion.

The royalty payments are based on the weight of the containers, and the USMX used the Port of Savannah as an example – claiming the ILA royalties increased from $6,028 in 1996 to almost $36,000 per worker last year.

"In reality, container royalties have morphed from an assessment imposed through arbitration in 1960 to what they are today – another form of compensation for ILA workers, who are among the nation's most highly compensated," said the USMX.

"The vast majority of ILA workers were not alive when containerization was introduced in New York in the late 1950s. In fact, only 136 of the 3,281 ILA workers at the Port of New York and New Jersey today were working at the port in 1968, the year container royalties were first distributed" the USMX said.

The shipping management alliance said it wants to negotiate a cap on the container royalties as opposed to eliminating them, and that its membership would "use the excess, not as savings for employers but to help pay for other benefits for ILA workers."

The ILA and USMX re-engaged with their on-again, off-again negotiations in Florida in late July as both sides at that time claimed to their respective members that there had been "significant discussions" on "critical items of importance" and that "substantial progress" had been made over what each have referenced publically as the central issues that include terminal automation, chassis pools, wages, and benefits.

However, last week, the USMX released a statement regarding the broken-off negotiations as the employer group referred to ILA workers being "among the most highly compensated workers in the country, on average receiving $124,138 a year in wages and benefits, which puts them ahead of all but 2 percent of all U.S. workers."

The ILA's Daggett retorted in a statement that: "USMX fails to note that longshore labor cost amounts to between 3 percent and 4 percent of the shipper's total cost."

When the two sides might get back to negotiations is now unclear as the shipping industry reportedly girds for the possibility of a longshore labor that could stretch from Maine to Texas.

The National Retail Federation's president and chief executive officer, Michael Shay, said earlier this week that without the "certainty" of a "secure, long-term" longshore labor contract, retailers and other shippers "will surely reevaluate their supply chains and the short-term and long-term reliance on these ports."
 
"Now that there is a real risk of disruption, most retailers using the East and Gulf Coast ports will be forced to executive contingency plans within the next week to meet in-store holiday deadlines," Shay said.

Trans-Pac shipping lines plan to offset cost of new North American coastal emissions reg

The principal group of container-shipping lines engaged in the eastbound trans-Pacific trade from Asia to U.S. announced they plan to implement an add-on per-box fee to its next bunker charge adjustment on October 1 in response to the new, reduced sulfur oxide requirement for commercial vessels transiting within 200 miles of North America's coastlines.

The Transpacific Stabilization Agreement said in a statement that the new fee would be $17 per-forty-foot container to the U.S. West Coast, and $21 per-FEU to the U.S. East and Gulf coasts.

On August 1, the North America Emissions Control Area came into effect as a result of the International Maritime Organization's MARPOL Annex VI protocol that requires what the TSA referred to as "more costly low-sulfur fuel" for vessels sailing in and out of the 200-mile coastal zones of the U.S. and Canada.

The TSA referenced pricing data by Platt's, an energy industry news and pricing data resource, that
price differentials between standard bunker and premium low-sulfur fuel at the four ports – Los Angeles/Oakland, Seattle, Charleston and New York – ranged from $87 to $260 per metric ton as of mid-August.

The TSA lines said they spent close to 2.7 sailing days per voyage within the North American ECA to the U.S. West Coast, and just over 4.4 days to the East and Gulf Coasts.

"As our member carriers have adjusted to comply with MARPOL Annex VI, the relative added cost per- FEU aboard ship as reflected in the charge is not huge, but the overall cost impact per sailing across the entire trade is significant," said the TSA's executive administrator Brian M. Conrad.

"Lines with scheduled services are also concerned about the spike in demand for low-sulfur fuel created by the ECA, and effects in the near and midterm on supply and price," Conrad said.

The TSA claims that for every $20 per-metric ton change in low-sulfur fuel prices, "component levels rise or fall $2-3 to the West Coast, and $5-6 to the East and Gulf Coasts."

Conrad said the TSA will start posting weekly low-sulfur prices on its website that will include a mechanism for with instructions for customers to calculate the likely component levels for the low-sulfur price adjustment, such as what the shipping line group says is currently used for calculating the bunker charge.

In addition to the new North American low emissions zone, there are ECAs in the Baltic and North seas.

A U.S. Caribbean ECA that covers Puerto Rico and the U.S. Virgin Islands is slated to take effect in 2014.

The TSA said the total estimated cost of the ECA by 2020 is $3.2 billion, which is aimed at achieving an 85 percent reduction in vessel SOx and particulate matter emissions.

More stringent ECA nitrogen oxide emissions requirements are scheduled to take effect in 2016.

Gulf ports still closed as Isaac closes in on New Orleans with pounding rain

Cargo ports in Louisiana, Mississippi and Alabama remained closed as a slightly weakened Hurricane Isaac continued to pound the Gulf Coast with maximum sustained winds of 75 miles per hour as it moved closer to New Orleans, according to the National Hurricane Center.

"Isaac continues to move slowly inland over Southeastern Louisiana…heavy squalls lashing New Orleans and the Mississippi Coast," was the latest report by the Hurricane Center.

Yesterday, U.S. Customs and Border Protection field offices had reported the following seaports, airports and CBP offices in the Gulf region suspended operations until weather conditions allow for resumption of services:

• Port of Pascagoula
• Port of Gulfport
• Port of Mobile
• New Orleans Airport
• Port of Morgan City
• Port of Gramercy
• Port of Baton Rouge
• Port of Morgan City

At the Port of New Orleans, container terminal operations were suspended, however the local CBP office reported that it would "remain open for transactions with the exception of duty collections 8/28/12 and would resume full administrative capability when conditions allow."

The CBP also reported it has opened emergency operations centers in the expected path of the storm.

"This hurricane has the potential to cause significant damage and we are taking this very seriously," said CBP Acting Commissioner David V. Aguilar.

"CBP's personnel are on standby to support local, state and federal requests for assistance," he said.

Here is the link to the National Hurricane Center's Isaac updates: nhc.noaa.gov

 

Thursday, August 30, 2012

Top Story

Largest ILA local votes to strike if deal not sealed before Sept. 30

In the wake of the recent standoff between the ILA and USMX, a strike of ILA’s 15,000 members came one step closer after the influential New York-New Jersey chapter weighed in Tuesday night.

The 900 members of ILA local 1804, based in Newark, voted unanimously on Wednesday to walk off the job “if a new master contract covering ports from Canada to Texas has not been reached” by the time the current deal expires on Sept. 30, reports the Star-Ledger.

"They wanted to get the message out that they were very, very unhappy," said ILA spokesman Jim McNamara of the rank-and-file membership. "It’s the biggest local in the ILA, so it has significance in terms of the mood of the union."

Labor negotiations between the two entities had re-engaged in late July, and “substantial progress” was reported with regards to key sticking issues, to include terminal automation, chassis pools, wages, and benefits.

But last week negotiations broke off and the employer group USMX released a statement referring to ILA workers as being "among the most highly compensated workers in the country, on average receiving $124,138 a year in wages and benefits, which puts them ahead of all but 2 percent of all U.S. workers."

Harold Daggett, president of the ILA, responded in a statement saying "USMX fails to note that longshore labor cost amounts to between 3 percent and 4 percent of the shipper's total cost."

When the two sides might get back to negotiations is now unclear.

The National Retail Federation's president and chief executive officer, Michael Shay, said earlier this week “Now that there is a real risk of disruption, most retailers using the East and Gulf Coast ports will be forced to executive contingency plans within the next week to meet in-store holiday deadlines."

For more of the Star-Ledger story: nj.com

Maersk Line's Skou anticipates key changes in China's export market

Maersk Line’s top executive, Soren Skou, expressed concerns about the growth of China’s export market, in a recent interview with The Wall Street Journal (WSJ). Based on the interview, the publication reported the recent slowdown could usher in a key change in the way that China does business.

Right now the country’s export growth is at the lowest level since the 2009 fiscal crisis. During the first seven months of 2012, Chinese export grew by 7.8 percent, according to the article.

Skou notes in the WSJ interview that Chinese salaries are on an upward trend, which may ultimately make China less effective as a manufacturing base for companies seeking cheap labor.

”It is obvious that China will become less competitive in some areas” Søren Skou says, according to the WSJ. He added that China is Maersk Line’s most important market and that the manufacturing of goods such as shoes and toys, is slowly being relocated to countries such as Vietnam and Bangladesh.

Skou also noted that China has been agile in adjusting its export strategy. Although manufacturing may be relocating to other countries, its production of other goods, technical products such as electronics and solar panels, is increasing.

For more of the ScandAsia.com story: scandasia.com

Port of Seattle CEO pressured to drop board appointment

Port of Seattle CEO Tay Yoshitani has been asked by members of the port commission to choose between his board membership at Expeditors International or resign from his $367,000-a-year port job.

When Gael Tarleton, the president of the Port Commission, asked Yoshitani to step down from the Expeditors’ board, Yoshitani reportedly said he intended to keep both jobs.

Commissioner Rob Holland said he had a meeting Tuesday with Yoshitani, reiterating that he'd have to choose due to the perceived conflict of interest of a port CEO also working for a global logistics company.

Commissioner Tom Albro disagreed, stating this week in a letter to 13 legislators that “Yoshitani's dual role had been vetted by the Port's top lawyer, who did not find any impermissible conflict of interest.” The legislators had asked the board to look for any issues of conflict of interest that could attach to Yoshitani’s role with Expeditors.

Expeditors pays its board of directors a $30,000-a-year retainer, $1,000 each day they attend board meetings or do other company work, and gives them $200,000 in restricted stock each year, reports the Seattle Times.

Yoshitani's employment agreement permits him to serve on the board of a company as long as he does it on his own time and the port's general counsel sanctions it as not being a “conflict of interest.”

Tarleton, who voted against the agreement, said in a statement "in addition to the indefensible compensation issues, the appearance of conflict of interest doesn't sit well with me." She said she has received more than 1,000 emails from people concerned about the Expeditors board post, and that since Yoshitani’s salary is one of the highest in the nation for a port executive, he should serve the public first.

Tarleton is reportedly setting up a meeting for next week for the commissioners to discuss their options.

For more of the Seattle Times story: seattletimes.com

Pirates take Panamax tanker carrying $54 million gasoil cargo

Pirates took a tanker transporting a gas oil load worth $54 million in the Gulf of Guinea. The Panamax tanker Energy Centurion from the Isle of Man went missing after the criminals had a gunfight with the Togo navy, reported vessel operator Enterprises Shipping & Trading. All communication from the ship went silent after a distress call was issued yesterday at 7:30 a.m. London time.

The ship might have been seized by the same pirates who took a smaller gasoil ship on Aug. 19, according to Richard Mcenery, chief operations officer of Ocean Protection Services.

For more of the BusinessWeek story: businessweek.com

 

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