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Summary for September 3 - September 7, 2012:
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Monday, September 3, 2012 Labor Day holiday.
Tuesday, September 4, 2012 CBN LABOR NEWS ALERTUSMX rejects "final offer" gauntlet thrown down by ILA
"I'm not sure how the ILA can expect a final offer when we have been unable to engage in any comprehensive negotiations for a new contract, including economic issues," wrote James Capo, chairman of the United States Maritime Alliance in a letter and email sent to Harold Daggett, president of the International Longshoremen's Association, on August 31. Capo was responding to a letter his group had received from Daggett dated August 30 that charged the USMX's latest position as "gutting wages and benefits." Daggett's letter said ILA leadership had "formally requested that USMX provide them with their best and final offer so that the 200 ILA Wage Scale delegates can convene and take a vote on the proposal and also vote recommend a strike." "At this time, USMX does not believe it is in a position to present a final offer to the ILA for consideration by its Wage Scale Committee," wrote Capo to his counterpart. 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. On the first two points, Daggett said last week that ILA leadership was "encouraged by the agreements we achieved with USMX in July on the issues of automation and chassis work." However, the last two points - wages and benefits - appear to have emerged as the central areas of contention as talks between the two sides broke off in late August. Capo said his group is "referring to archaic work rules and manning practices, and the system of guarantees and overtime pay practices that result in millions of dollars being paid for time not worked. These inefficiencies are causing many of our ports to become prohibitively expensive, harming our competitive ability and threatening the long term viability of our operations." Daggett said on Friday "USMX demanded that the ILA give up its eight-hour guarantee that many port areas of the ILA have had for years. USMX also demanded that the ILA radically change the hard-fought contractual rules for the payment of overtime. These were items that should not even have been part of the master contract discussions, but USMX insisted that talks could not continue unless we agreed to negotiate this items." "United States Maritime Alliance boasts of having successfully negotiated contracts with the ILA without any disruptions to service since 1977, but they fail to mention that stability came with tremendous sacrifices made by the ILA and a spirit of cooperation between the shippers and carriers on one side and the ILA on the other," said Daggett. The USMX announced earlier last week that its membership would also like to place a cap on the so-called "container royalties" that employers claim rose to over $211 million in 2011. Container royalties were initially implemented to protect ILA members from any loss of work due to the advent of containerization and automation in cargo handling in the early 1960s. "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 referred 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." 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, and if, the two sides might get back to negotiations continues to be unclear as the shipping industry reportedly girds for the possibility of a longshore labor strike that could stretch from Maine to Texas. "We stand ready and willing to engage in comprehensive bargaining to reach agreement on a new contract, including all economic issues," said Capo. "However, that comprehensive bargaining must include substantive discussion on the issues raised by USMX. We must discuss putting programs in place that will correct these issues over a period of time," Capo said. The National Retail Federation's president and chief executive officer, Michael Shay, said last 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."
Wednesday, September 5, 2012 Top StoryDrewry: Container leasing fleet grew 10.6 percent in 2011
After the global economic downturn in 2009 there was an "unprecedented upsurge" in container lease demand at 9 percent in 2010 that "took the lease industry by surprise and quickly turned into an equipment oversupply," according to Drewry Maritime Research's latest Container Leasing Industry report. However, the bulk of 2011's and 2012's container leasing growth was in each year's first half due to "changes in market demand and the operating dynamic of the global container transport industry, which have occurred since the downturn of 2009," the report said. Shipping lines have adopted stronger operating efficiencies, such as slow steaming, with a global container-to-slot ratio of 1.85:1.00, compared to the almost 2:1 average before the economic crash in the fourth quarter of 2008, according to the report. "A similarly uneven growth pattern has marked 2012 so far, as lease company investment was to soar again during the opening six months, before stalling again by mid-summer," the report said. "Again, peak season demand did not play out exactly as predicted – leaving many leasing companies with newbuild surpluses, and further plunging newbuild lease rates" the report said. Despite market volatility, box lessors have won back some market share from the container fleet-owned sector with 50 percent higher growth during 2010-2011, after losing out to owned equipment during the economic boom years of 2004-2008, the Drewry report said. "The reason for the lease industry's changed position is due to the continued poor fiscal state of the container shipping industry and its limited access to capital," the report said. "Investors have been attracted by the continued strong performance of the box lease industry, as its utilization stayed above 95 percent during 2011 and into 2012," the report said. Newbuild lease rates have "continued to erode against new box prices – both in the standard and reefer sectors," said Drewry. "New dry freight container prices were to fluctuate markedly during 2011, falling by about 25 percent by the year-end from their earlier peak of almost $3,000 (per CEU), although they subsequently revived by 20 percent again during to opening half of 2012 – to reattain $2,750. By comparison, the average dry freight per diem fell by Cash investment returns have returned to 2008-09 levels – the heart of the global recession years, with downward pressure from "the top end of the lease industry, where companies are vying for ever-cheaper financing, greater operating economies and increased market share." In 2011, there was 22 percent growth in the leased reefer fleet in addition to the record purchase of close to 130,000 TEUs, the report said. "Although this was fueled largely by the strength of reefer demand, it was also a by-product of the worsening dry freight sector, which channeled greater funding into reefer purchase, and the existence of a greater spread of established competitors," the report said. The Drewry report claims "there has been no let up in the lessors' purchase of reefer equipment during 2012," with overall container leasing growth forecast to be up to 9.5 percent this year. USMX rejects "final offer" gauntlet thrown down by ILAThe alliance representing shipping industry management at cargo ports on the East and Gulf coasts has rejected the demand issued by the longshoremen's union late last week to submit a "best and final offer" as work rules, wages and benefits have risen to the fore as the most contentious hurdles to getting a new master contract hammered out by the September 30 deadline in order to avert a possible waterfront labor strike. "I'm not sure how the ILA can expect a final offer when we have been unable to engage in any comprehensive negotiations for a new contract, including economic issues," wrote James Capo, chairman of the United States Maritime Alliance in a letter and email sent to Harold Daggett, president of the International Longshoremen's Association, on August 31. Capo was responding to a letter his group had received from Daggett dated August 30 that charged the USMX's latest position as "gutting wages and benefits." Daggett's letter said ILA leadership had "formally requested that USMX provide them with their best and final offer so that the 200 ILA Wage Scale delegates can convene and take a vote on the proposal and also vote recommend a strike." "At this time, USMX does not believe it is in a position to present a final offer to the ILA for consideration by its Wage Scale Committee," wrote Capo to his counterpart. 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. On the first two points, Daggett said last week that ILA leadership was "encouraged by the agreements we achieved with USMX in July on the issues of automation and chassis work." However, the last two points - wages and benefits - appear to have emerged as the central areas of contention as talks between the two sides broke off in late August. Capo said his group is "referring to archaic work rules and manning practices, and the system of guarantees and overtime pay practices that result in millions of dollars being paid for time not worked. These inefficiencies are causing many of our ports to become prohibitively expensive, harming our competitive ability and threatening the long term viability of our operations." Daggett said on Friday "USMX demanded that the ILA give up its eight-hour guarantee that many port areas of the ILA have had for years. USMX also demanded that the ILA radically change the hard-fought contractual rules for the payment of overtime. These were items that should not even have been part of the master contract discussions, but USMX insisted that talks could not continue unless we agreed to negotiate this items." "United States Maritime Alliance boasts of having successfully negotiated contracts with the ILA without any disruptions to service since 1977, but they fail to mention that stability came with tremendous sacrifices made by the ILA and a spirit of cooperation between the shippers and carriers on one side and the ILA on the other," said Daggett. The USMX announced earlier last week that its membership would also like to place a cap on the so-called "container royalties" that employers claim rose to over $211 million in 2011. Container royalties were initially implemented to protect ILA members from any loss of work due to the advent of containerization and automation in cargo handling in the early 1960s. "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 referred 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." 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, and if, the two sides might get back to negotiations continues to be unclear as the shipping industry reportedly girds for the possibility of a longshore labor strike that could stretch from Maine to Texas. "We stand ready and willing to engage in comprehensive bargaining to reach agreement on a new contract, including all economic issues," said Capo. "However, that comprehensive bargaining must include substantive discussion on the issues raised by USMX. We must discuss putting programs in place that will correct these issues over a period of time," Capo said. The National Retail Federation's president and chief executive officer, Michael Shay, said last 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." G6 Alliance suspends Asia-Europe loopThe G6 shipping line alliance of APL, Hapag-Lloyd, Hyundai Merchant Marine, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Orient Overseas Container Line, announced the winter suspension of the Loop 3 service between Asia and Europe that is to take effect Oct. 6. The shipping lines cited scheduled vessel maintenance and "forecasted lack of improvements in the market environment in the Asia-Europe trade," as reasoning for the service's suspension. "The market environment will be closely monitored for the resumption of the Loop 3 service accordingly," the alliance said in a statement. China to increase rail stimulus investment in face of slowing economyChina's Ministry of Railways will reportedly increase it's previously announced investment target another $4 billion for railway construction this year to $78 billion as a form of stimulus amid what the government there says is a slowing economy. "The investment on new railways will be at least 67 billion yuan a month from September till the end of this year," said China Railway Group's President Bai Zhongren at a news conference in Hong Kong on Tuesday. The latest rail stimulus increase marks the third time this year China's government has reportedly done so, with the original amount intended to be $64 billion. "The Ministry of Railways will hold a mobilization meeting soon, which is very rare and it demonstrates its determination on boosting the railway construction," said Bai. China's Purchase Managers Index dropped to an unexpected 49.2 in August from 50.1 in July, its lowest point in nine months. "I can tell you for sure that the second half of this year will be better than the first-half (for China Railway Group)," Bai said. For the full China Daily story: chinadaily.com.cn Port of New Orleans up and running after IsaacAll of the terminals at the Port of New Orleans reportedly back to normal operations in the wake of Hurricane Isaac. The Mississippi River was reopened Sept. 1, and since then New Orleans' port has reportedly handled 19 ships with another six due today.
Thursday, September 6, 2012 CBN Labor News AlertILA-USMX talks to resume under federal mediation
The stalled talks between the International Longshoremen's Union and their employers, represented by the United States Maritime Alliance, will resume their contract negotiations next week with a U.S. federal mediator presiding, according to an announcement. "Upon the request of the Federal Mediation and Conciliation Service, the parties have agreed to resume negotiations under our auspices during the week of September 17, 2012," said FMCS Director George H. Cohen in a statement. The Federal Mediation and Conciliation Service is an independent U.S. government agency created in 1947 to operate as a conflict resolution buffer between contentious labor and management issues. "Due to the sensitivity of this high profile dispute and consistent with the Agency's longstanding practice, we will not disclose either the location of the meeting or the content of the substantive negotiations that will take place," Cohen said. The USMX rejected the demand issued by the longshoremen's union that represents a labor force at ports from Maine to Texas late last week to submit a "best and final offer" as work rules, wages and benefits have risen to the fore as the most contentious hurdles to getting a new master contract hammered out by the September 30 deadline in order to avert a possible waterfront labor strike. "I'm not sure how the ILA can expect a final offer when we have been unable to engage in any comprehensive negotiations for a new contract, including economic issues," wrote James Capo, chairman of the United States Maritime Alliance in a letter and email sent to Harold Daggett, president of the International Longshoremen's Association, on August 31. Capo was responding to a letter his group had received from Daggett dated August 30 that charged the USMX's latest position as "gutting wages and benefits." Daggett's letter said ILA leadership had "formally requested that USMX provide them with their best and final offer so that the 200 ILA Wage Scale delegates can convene and take a vote on the proposal and also vote recommend a strike." "At this time, USMX does not believe it is in a position to present a final offer to the ILA for consideration by its Wage Scale Committee," wrote Capo to his counterpart. Daggett said last week that ILA leadership was "encouraged by the agreements we achieved with USMX in July on the issues of automation and chassis work." However, wages and benefits appear to have emerged as the central areas of contention as talks between the two sides broke off in late August. Capo said his group is "referring to archaic work rules and manning practices, and the system of guarantees and overtime pay practices that result in millions of dollars being paid for time not worked. These inefficiencies are causing many of our ports to become prohibitively expensive, harming our competitive ability and threatening the long term viability of our operations." Daggett said on Friday "USMX demanded that the ILA give up its eight-hour guarantee that many port areas of the ILA have had for years. USMX also demanded that the ILA radically change the hard-fought contractual rules for the payment of overtime. These were items that should not even have been part of the master contract discussions, but USMX insisted that talks could not continue unless we agreed to negotiate this items." The National Retail Federation's president and chief executive officer, Michael Shay, said last 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."
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The alliance representing shipping industry management at cargo ports on the East and Gulf coasts has rejected the demand issued by the longshoremen's union late last week to submit a "best and final offer" as work rules, wages and benefits have risen to the fore as the most contentious hurdles to getting a new master contract hammered out by the September 30 deadline in order to avert a possible waterfront labor strike.
Leased shipping container demand continued on a mostly positive pattern of growth from 2010 by climbing 10.6 percent in 2011, buoyed by reefer box rentals despite a sluggish second half of the year as peak season didn't live up to expectations, according to an industry report.