ILA Strike Watch 2012: Christmas Brings Hope of Strike Free New Year

 In container shipping, exports, ILA Strike, Imports, International Shipping

ILA Strike Watch

The ILA and USMX will be meeting again before the contract ends and an ILA strike shuts down East Coast and Gulf ports. Merry Christmas!

Well, it’s not as good of a Christmas gift as the ILA and USMX coming to an agreement before a strike deals another blow to the U.S. economy.

However, it is a necessary step in the right direction.

On Christmas Eve, the Federal Mediation and Conciliation Service (FMCS) released the following brief statement:

WASHINGTON, D.C. — “FMCS Director George Cohen has called a meeting of the ILA and the Maritime Alliance in advance of the December 29th expiration of the contract extension. The parties have agreed to attend. Due to the sensitive nature of the negotiations FMCS will have no additional comment at this time.”[1]

It is fitting with the spirit of Christmas that Christmas should bring hope to an extremely bad situation.

USMX was making last ditch efforts to get ILA to turn back to a commitment toward negotiating before a labor strike would occur. This effort included putting a spotlight on the consequences the strike would have on union members, not just the U.S. economy and supply chain related jobs.

Not only would any disruption have serious consequences for the nation’s still-recovering economy, but it would also jeopardize the financial well-being of the ILA’s 14,500 members, who would lose nearly $5 million in wages and benefits for each day they’re out of work or a total of $150 million in lost compensation in just a month.

At the Port of New York and New Jersey, which employs more ILA members than any of the 13 other East and Gulf Coast ports, the union’s 3,250 members would lose $7.5 million a week in wages alone.

A strike at the port, the largest on the East Coast, could also put at risk the nearly 171,000 jobs directly related to New York and New Jersey port operations.

At Hampton Roads in Virginia, a one-month shutdown would cost ILA workers more than $10 million in lost wages and benefits.

At the Savannah and Brunswick ports in Georgia, a shutdown of union operations would result in an estimated $2.3 million a week in lost wages and benefits for ILA members. [2]

 

But there was little hope to go with USMX’s urging of the ILA to turn back to the negotiating table before striking.

Harold J. Daggett, ILA president, sent the following in a letter addressed to the ILA Local Unions Covered by the Master Contract on December 19th:

Unfortunately, Master Contract nengotiations are not progressing well and it is expected that there will be a coastwide strike beginning at 12:01 A.M. on Sunday, December 30, 2012. It is imperative that all ILA local unions begin immediately to prepare for a strike. There follows a list of items that should be reviewed and implemented:

  1. Establish a strike committee which shall be responsible for assigning and scheduling picket duty and acting as a clearinghouse for all matters relating to struck work.
  2. All picket signs shall use only language approved by the ILA General Cousel’s office. Approved language for picket signs shall be provided by the International.
  3. There shall be no violence on any ILA picket line.
  4. Orders to handle containerize cargo shall not be honored.
  5. Orders to handle perishable commodities (fresh with a limited shelf life, not frozen) shall be honored.
  6. Orders to handle containerized military cargo (not household goods) shall be honored.
  7. Orders to handle passenger ships shall be honored.
  8. Orders to handle non-containerized cargo and automobiles shall be honored.
  9. Those failing to abide by strike rules or International directives shall be subject to discipline under the ILA Constitution.

Any questions that may arise are to be referred to the International for response.

Going along with the last negotiation try breaking down, no more negotiation meetings scheduled, and the above letter from Daggett telling the ILA to prepare to strike, carriers have been preparing for the strike as well.

The way the carriers prepared was by ceasing to take shipment orders through the U.S. East Coast and Gulf ports and by implementing Port Congestion Surcharges.

In a customer advisory, CMA CGM issued the following:

We anticipate that that the ILA labor action will immediately result in port congestion along the East and Gulf Coasts. Accordingly, all cargo scheduled to arrive or depart any U.S. East or Gulf Coast port on or after December 30, 2012, will be assessed a Port Congestion Surcharge as follows:

$800/D20

$1000/D40

$1100/H40

$1266/H45

$1600/H53

The surcharge shall remain in effect until the labor action has ceased and all resulting port congestion has been cleared. Notice of cessation of the surcharge will be issued for each port or port range as congestion clears.

Maersk included the following in a customer advisory letter:

All customers with IMPORT cargo arriving prior to the 29th of December are encouraged to pick-up cargo as soon as possible. Please also ensure the expedient return of your empty containers and chassis.

All customers with EXPORT cargo moving to an US East/Gulf coast port should be aware that once the cargo is gated in and a disruption occurs the cargo will likely sit at the terminal until the disruption is over.

REEFER Customers with import/export cargo on terminal at the time of a disruption can expect that, to the best of our ability their cargo to be continually monitored throughout a disruption, as no customers will have access to picking up cargo. For REEFER customers with export cargo moving to an East/Gulf coast terminal CSX rail will stop accepting reefer cargo as of December 23, 2012.

For cargo delivered to the terminal, gated–in, with knowledge of the strike will be at risk due to our limited ability to service this cargo. Shippers should be aware and consider this risk and exposure prior to cargo delivery.

If there is a disruption our ability to access equipment at the terminals will be limited. Therefore, please be advised that all Maersk Line bookings will continue to be accepted; however they will be subject to equipment availability.

Hapag-Lloyd released a customer info document on December 20th confirming their plans in light of the impending strike that included the following:

Question: Is Hapag-Lloyd charging a congestion surcharge?

Answer: Hapag-Lloyd has implemented a congestion surcharge. Please refer to our customer letter of November 8th 2012 which is available in our website along with all previous customer letters,

http://www.hapag-lloyd.com/en/news/surcharges.html

Please also find the applicable tariff verbiage below:

RURE-001 rule 056.1.3

Congestion Surcharge to and from USA

It is recognized that a strike, lockout, work stoppage, work slowdown or other labor-related disruption to operations at any U.S. port (collectively, “labor unrest”) will cause congestion. Accordingly, notwithstanding any other provision of this tariff, in the event of labor unrest, Hapag-Lloyd will implement a Congestion Surcharge effective December 1, 2012, applicable as follows:

For all import cargo received by the Carrier or its agent after the effective date of this rule and scheduled to arrive at any U.S. location, via U.S., Canada or Mexico ports on or after December 1, 2012. (This charge shall be payable on a freight collect basis, although if agreed by Carrier and Shipper, it may be paid on a prepaid basis.)

(Congestion Surcharge Destination) (CGD)

For all export cargo received by the Carrier or its agent after the effective date of this rule at any U.S. location, whether shipped via U.S., Canada or Mexico ports. (Congestion Surcharge Origin) (CGO)

Subject to those rights and remedies available under Carriers Bill of Lading, other rules contained in this tariff or otherwise, all shipments as noted above shall be subject to a congestion charge in the amount of:

USD 800 / 20′

USD 1000 / 40′

USD 1125 / 40′ HC

USD 1266 / 45′ HC


In the event no labor unrest occurs, this charge shall not be applicable. Once labor unrest has occurred, this charge shall continue to be assessed until such time as Carrier provides notice in this tariff that the impact of the labor unrest on its operations and those of any affected port(s) has ended.

Those are responses from just three carriers that move import and export goods through East Coast and Gulf ports, but it’s enough to get a good idea of how all the carriers are reacting to the strike that seemed inevitable two days ago.

But today is Christmas. Hopefully, you are enjoying it with your family and friends without the storm cloud of an economically damaging strike looming over your head.

However, if you do feel the shadow of that cloud creeping over your Christmas scene, remember there is a new ray of hope. USMX and ILA are resuming negotiations under the mediation of the FMCS.

The New Year has a chance of being strike free even yet.

UCM's ILA Strike Watch

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