Is the ILWU on the defensive? - Peter Tirschwell | Dec 30, 2014 11:44AM EST Do West Coast employers think they have the mighty ILWU on the defensive? Judging from events over the past several days and especially Monday, it’s hard to avoid that impression. It took a week for the International Longshore and Warehouse Union to respond to the Pacific Maritime Association’s request for a federal arbitrator to break the impasse in negotiations that have been going on since May with no resolution — an idea the union clearly doesn’t like. And when the union finally did respond Monday, ignoring the issue of the mediator and calling for direct negotiations with carriers, it took the PMA 23 minutes to reply. And when it did, the gloves came off. If there is one issue that employers know will undercut any possible sympathy the longshoremen would hope to have from the public, it is how much they make. At a moment when the union is being castigated in newspaper editorials for months of work slowdowns that are causing losses for exporters, for being a monopoly, and with some calling for the tougher Railway Labor Act to govern U.S. longshoremen, the PMA didn’t let the opportunity pass. “The average full-time ILWU worker currently earns in excess of $147,000, and is eligible for a pension with a maximum annual benefit of nearly $80,000 — and current proposals would increase these even further,” the PMA said Monday. The average U.S. per capita income was $45,863 in 2013. Indeed, the PMA was scornful of the main points made by the ILWU in its Monday press release, that carriers and terminals should come to the bargaining table directly rather than negotiating through the PMA (when, in fact, the PMA is nothing if not its carrier and terminal members), and that the disruption seen this fall on West Coast docks is caused by actions of carriers, not longshoremen. The union seemed to be channeling a theme frequently heard during the demise of U.S. carriers in the 1980s and 1990s — that foreign carriers can’t be trusted. “The ILWU’s escalating rhetoric on congestion is nothing more than a smokescreen for its slowdown activities,” the PMA said in its announcement, in which it provided specific details of the longshoremen’s disruptive actions. How these negotiations went sour after months earlier in the year when the two sides seemed committed to a disruption-free negotiations is a story yet to be fully told given how little information has seeped out from the talks. But take a step back and a fuller picture begins to emerge. If there is one unequivocal direction in which carriers have been moving since the last contract was signed in 2008, it’s cost-cutting as the most viable route to competitiveness and eeking out profits. Carriers know that supply and demand is unpredictable and freight rates in general are headed downward. Maersk said in November that freight rates are falling at a rate of 2 percent annually, thus, to maintain profits, carriers must cut costs by at least that amount. Withdrawing from providing chassis in the U.S., ordering mega-container ships of 19,000 TEUs and more, and entering into global alliances that aggregate the largest available tonnage are examples of the lengths carriers will go to cut costs. As that happens, the areas where high costs remain increasingly stand out. And there are fewer more glaring examples of that than on the U.S. West Coast, where cargo-handling fees are some of the highest in the world, and where low productivity makes those rates hard to justify from the carrier point of view. That is why the trans-Pacific is consistently one of the least profitable markets for carriers. “The central truth in this market is that every carrier is operating at a loss,” Transpacific Stabilization Agreement Executive Administrator Brian Conrad said in late 2013. Thus, carriers are therefore less willing than they were in years past to give the ILWU generous pay and benefit increases as a trade off for peace on the waterfront. The PMA offered a hint at this Monday, saying that “jurisdiction” and “work rules” are two of the areas where there is still no agreement between the two sides. Jurisdiction, among other things, refers to whether the ILWU will maintain chassis, as one union leader revealed last week, where the wheeled units are no longer owned by carriers who are obligated to use ILWU labor for maintenance and repair. But it also extends to work rules that limit productivity and hamper the introduction of terminal-handling automation that is needed to effectively handle the mega-ships calling at West Coast ports and the surges of containers they disgorge onto marine terminals. In addition to the impact of slowdowns on exporters and importers, there is also the issue of the slowdowns undermining the competitiveness of West Coast ports, another broader economic impact that will resonate with the public. It used to be that there was no alternative to the West Coast for trans-Pacific cargo. For a lot of trans-Pacific cargo there is still no viable alternative, but with the Panama Canal set to expand in just over a year and Suez services gaining in popularity, West Coast ports do not enjoy the monopoly they once had, a point the PMA has noted several times during the negotiations. “The West Coast ports are losing their competitive edge in an environment that will only become more challenging with the opening of the expanded Panama Canal next year,” the PMA said Monday. But whether any PR advantages the PMA may enjoy will translate into victories at the negotiating table is an open question. The PMA’s track record is not encouraging — countless concessions to maintain peace on the waterfront with relatively little to show for it in terms of greater productivity. Veteran U.S. terminal executives insist carriers have had enough and are willing to absorb short-term pain — as they did during the 10-day lockout in 2002 — for long-term gain. But so far there are only indications they are leaning this way, not the hard evidence that carriers are willing to go to the mat. That possibility is why 2015 is already a potentially pivotal year, and it hasn’t even begun.
Posted on: Wed, 31 Dec 2014 04:45:19 +0000
Trending Topics
Recently Viewed Topics
© 2015