ILA Delegates Approve, in Principle, Master Contract

Wage scale delegates for the International Longshoremen’s Association on Tuesday afternoon approved, in principle, the proposed aspects of a master contract for its dockworkers on the U.S. East and Gulf coasts.ILA spokesman Jim McNamara said the union and representatives of the U.S. Maritime Alliance (USMX), the group that represents employers, will meet jointly on Wednesday at 1:30 p.m. to review the complete master contract proposal. The 200-plus wage scale delegate, who will make a recommendation to the union’s rank-and-file on whether or not to approve the contract are meeting in Tampa, Fla., through Thursday.

On Feb. 1, the ILA and USMX announced they had reached tentative agreement on a new, six-year master contract covering about 14,500 ILA workers who work at 14 container ports on the East and Gulf coasts, and the two sides agreed to keep ports operating normally while negotiations on local contract issues continued.The master contract is subject to formal ratification by both sides and successful conclusion of negotiations on local contracts. Last week, the ILA said it reached a tentative agreement on local contract issues with the New York Shipping Association (NYSA). That agreement was said by the union to be “subject to some tweaking,” but will be presented to local union officials this week. Some other local negotiations are also continuing.

Following this week’s meeting of wage scale delegates, the ILA said it hopes to schedule a date for ratification of both the master contract and local contracts for its members on the Atlantic and Gulf coasts.

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Sequestration: BEST PRACTICE

As we have recently reported, Congress has yet to agree on a new budget.  Sequestration has begun, with immediate cuts to overtime already taking affect as of March 1.  Personnel furloughs may begin mid-April.  Due to the estimated magnitude of reductions, CBP estimates that there will potentially be delays in all aspects of cargo facilitation.

CBP has offered the following advice for importers:

  • Pre-filing Entry Data - While not all importers are participating in CBP trade facilitation initiatives, we cannot over-emphasize the importance of pre-filing entry information.  Pre-filing the entry gives CBP and other federal agencies and opportunity to conduct risk assessments and resolve outstanding issues before the cargo arrices in the US and allows agencies to provide the trade with a release decision as early as possible,
  • Perishable Commodities – CBP will continue to process perishable commodities as a top cargo priority
  • Other Government Agencies - CBP will work with its partner government agencies that have oversight responsibilities for import and export shipments to minimize the disruption caused by sequestration.
  • CBP Partnership Program – At this time, there are no plans to eliminate or reduce trade facilitation benefits for CBP trusted trader participants.  Customs-Trade Partnership Against Terrorism (C-TPAT) members will continue to receive priority (“front of the line”) treatment for examinations.  As a tangible benefit for the substantial efforts taken to secure the supply chain, C-TPAT companies are 4-6 times less likely to undergo and inspection.  During the first 30 days of the sequestration, (March1-30) we expect minimal delays.  However, once the furloughs commence, delays will impact shipments for trusted partners that have been designated for examination.

Communication – CBP is committed to ongoing communication with the trade community, both at the national level and through communication at the port level, as port directors reach out to their local stakeholder groups.  Additionally, CBP managed accounts have their assigned CBP account managers to assist them with any issues that arise and the CEE staff to provide guidance

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Importers, exporters, carriers should expect U.S. border delays

 

As U.S. funding cuts are implemented, Customs and Border Protection (CBP) in the U.S. has indicated that it is taking steps to reduce its work hours by the equivalent of over 5,000 border patrol agents and 2,750 inspectors. It plans to cut overtime immediately, followed by furloughs, which are lengthier to take effect.

Furthermore, CBP has warned that carriers, importers and exporters should expect border delays to double, from two to four or more hours as a result, and it could take five days or more for cargo exams.

Companies relying on cross-border shipments should make allowances for such delays in their business plans and processes. Importers are urged to contact their carriers to discuss staging cargo in advance, in the event of a shutdown.

CBP has said that security would not be compromised and that agriculture exams would continue.

Importers and exporters who take part in CBP’s efficient trusted trader and frequent trader programs will have an advantage over those who do not. Customs-Trade Partnership Against Terrorism (C-TPAT) and Air Cargo Advance Screening (ACAS) participants will continue to have access to their respective CBP points of contact.

It appears that the Food and Drug Administration (FDA) and the Animal and Plant Health and Inspection Service (APHIS) do not expect to resort to employee furloughs.

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Sequestration: How it Will Affect Your Supply Chain

If our Congress does not act on a budget by close of their business day today, sequestration will be in affect beginning tomorrow, March 1.  Under sequestration, all government agencies will evenly take a budget cut.  Included in those agencies affected are the U.S. Customs and Border Protection; who is the enforcer and facilitator of its regulations as well as all those government agencies that impact your supply chain on imports and exports.

While notifications of furloughs do not go into affect until 30 days from notice, we will see on both imports and exports immediate impact on exams of all types, wait time at border crossings, and document and data review on standard transactional shipments.  Secretary Napolitano states that it could take an additional five days on standard transactions for exams and clearances.

In comments made today by CBP, there will be a slow down in the processing of ruling requests.  The agency is going to utilize a risk-based approach to more of their discretionary functions such as programming, enforcement of  intellectual property rights, and anti-dumping/countervaling.

The Animal and Plant Health and Inspection Service (APHIS) is unlikely to need to furlough its employees, but will shift responsibilities to other employees.  This is also true of the Food and Drug Administration (FDA).  Still, the import process relies heavily on conditional releases from CBP, meaning that delay will create delays elsewhere in processing.

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PORT OF TACOMA’S FUTURE

Among the lessons that the recent recession taught the Port of Tacoma was that relying too heavily on a single line of business, no matter how potentially profitable, was an invitation to financial hardship. The port’s nearly single-minded devotion to turning the Tideflats into a vast container terminal from one end to the other put a strain on the port’s finances, led to layoffs and nearly left the port with a billion dollar terminal it couldn’t complete when container traffic fell 25 percent and its newest customer backed out of the terminal deal. Now a new strategic plan, in force for a little less than a year, puts a new emphasis on diversifying the port’s mix of cargoes and improving the productivity of existing facilities instead of creating new ones. The wisdom of that strategy has been demonstrated with the move last summer of the Grand Alliance container shipping consortium from the Port of Seattle to the port’s underused Washington United Terminal. And the port’s efforts to diversify its cargo mix received a significant boost with the approval of new contract last month with a major new non-container customer, Targa Sound Terminal.

Targa will spend up to $150 million of its own money to build a new petroleum products tank farm on one of the port’s prime development sites, the old Kaiser Aluminum Co. smelter plant. That new facility will create 50 new permanent jobs at Targa and countless other jobs for railroad and longshore workers. Those workers will handle the unit trains bringing the cargo from the Great Plains and the ships and barges that will move crude and petroleum to Washington refineries and distribution facilities.

While Targa’s investment and its employment increase won’t match those generated by the Grand Alliance’s container operations, it will be a major step in further balancing the port’s business toward noncontainer operations. The Targa commitment is just the latest in a series of steps the port has taken to attract and retain other businesses on the Tideflats.

The port has revived the log export business, which had disappeared from port’s waterways a dozen years ago. It has signed up two shipyards, one a yacht builder and the other a small warship builder, to occupy World War II shipyard buildings once slated for demolition.

It has inked an extended contract with Temco for the Port’s Schuster Parkway grain terminal that ensures that facility will continue in operation for decades to come. It increased the port’s breakbulk volume by 68 percent in 2012. Breakbulk cargoes are items such as earth-moving machinery and tractors too bulky to be containerized.And the port has agreed to rehabilitate and repair several decades-old buildings to house smaller contractors and businesses.

The port, under chief executive John Wolfe, has found new focus in pursuing a wide variety of water-related businesses.

Targa will initially spend about $80 million for the first phase of the project and then expand it as the need demands, said Goodman.The logistics company will continue to operate its facilities on the Hylebos Waterway. It will connect the Kaiser site tank farm with the Hylebos site by pipeline. That pipeline will be built in the Taylor Way right of way.The Kaiser site facility will be connected to the East Blair wharf with another pipeline. Goodman said he expects about 15 ships and barges will call at that dock monthly when the facility is working at capacity The ships will typically be 600-to-700-foot-long tankers equipped with double hulls. The East Blair Wharf is another port facility that’s been unused since it was completed in 2009, said the port.The tankers and barges will be surrounded by a boom when they’re loading and unloading to prevent any spilled oil from spreading, said Goodman.Targa is a member of a consortium of oil handlers that maintains oil containment and cleanup facilities and boats on Puget Sound to respond to a spill.

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ILA Releases Master Contract Details

The International Longshoremen’s Association revealed details of the tentative master contract it has negotiated with the U.S. Maritime Alliance (USMX), posting them on the ILA Website on Wednesday.

 

The six-year contract would expire Sept. 30, 2018 and provide ILA members with a $3 increase over three years – a $1 increase on Oct. 1, 2014; another $1 increase on Oct. 1, 2016 and lastly a $1 increase on Oct. 1, 2017. The starting salary for new members remains $20 per hour. A wage progression formula that ramps up the pay of workers that make less than the highest straight-time basic wage rate will see their salaries boosted to the same level as the highest paid workers over a six-year, rather than a nine-year period.

 

The ILA noted the agreement is “subject to the drafting of final contract language and acceptance by the ILA membership” and the new master contract will not take effect until all local bargaining is concluded. James A. Capo, chairman and chief executive officer of USMX, said “the summary as posted on the ILA Website is accurate, and local negotiations are progressing,” but could offer no comment beyond that. Eligible union members will continue to receive health care coverage under the union’s MILA program at no cost.

 

ILA detailed the compromise it had reached with union members over container royalties, payments that are made to longshoremen based on the weight of containerized cargo in the port they work.USMX said “container royalties were first established in 1960 as a way to protect ILA members in New York from job losses created by containerization. Today, thousands of ILA workers who were not alive in 1960 continue to receive container royalty payments that in 2011 totaled $211 million –an average of $15,500 for ILA workers at the 14 East and Gulf coast ports.” USMX originally said it wanted to cap the payments, using the excess not as savings for employers, but to help pay for other benefits for ILA workers. Disagreement over what to do about royalties led to a breakdown in the talks in December.

 

The two sides reached a compromise and the ILA said it will provide a minimum coastwise guarantee of $211 million in container royalty for each year of the contract and that $14 million of administrative expenses will also be covered. It said all container royalty over those amounts will be evenly split between USMX and ILA.It said container royalty will be centrally collected according to a plan that has yet to be finalized and a Carrier-ILA Container Royalty Fund No. 5 (CR-5 Fund) that was established Oct. 1, 2009, will continue. That fund, administered by a board comprised of an equal number of trustees appointed by the ILA and USMX, provides financial assistance to joint management-ILA employee benefit plans other than pensions.

 

 

 

 

Other provisions include:

•                                                    Container Freight Station Fund will continue for both the operation of container freight stations and training with a contribution of 25 cents per ton in the first three years and subject to review in the last three years and a CFS subsidy adjustment in each of the six years.

•                                                    Local fringe benefit contribution will increase by $1 per hour.

•                                                    Random drug testing will be used in New York and New Jersey only if the Waterfront Commission agrees to stop testing ILA members.

•                                                    New language has been negotiated to protect those who have been displaced due to new technology and automation.

•                                                    Additional language has been negotiated to preserve chassis maintenance and repair work.

•                                                    New language has been negotiated to beef up enforcement by the Jurisdiction Committee of ILA jurisdiction, including a $10,000 fine in certain circumstances.

•                                                    Additional jurisdiction language has been negotiated.

•                                                    Major damage criteria and maintenance jurisdiction have been expanded.

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ILWU Local 63 OCU Clerks Reject Some Contracts

 

Members of the International Longshore and Warehouse Union’s Local 63 Office Clerical Unit (OCU) rejected some of the proposed contracts that were reached with employers last December during ratification voting on Wednesday night, raising questions about a settlement that ended a strike that shut down the ports of Los Angeles and Long Beach for eight days last fall. After the 600 members of the OCU went on strike against terminals and steamship agencies, other members of the ILWU honored their picket lines, bringing to a halt work at 10 terminals and most activity in the two ports, which handle about 40 percent of the nation’s container traffic.

Michele Lujan, office administrator for the OCU, said union members voted down contracts with the APM Terminals which has a terminal in Los Angeles, and shipping agencies for Evergreen and China Shipping. Another 13 contracts were approved.

She said there was a stipulation in the contracts that said all 16 individual contracts for the 14 employers (some employers have two OCU contracts) have to be approved.

Stephen Berry, an attorney for the Los Angeles/Long Beach Harbor Employers Association which negotiated on behalf of the employers, said early Thursday morning he had not yet been contacted by the OCU and had only heard rumors.

Los Angeles Mayor Antonio Villaraigosa said the eight-day strike in late November and early December cost the local economy billions of dollars.

 

- We will follow this events and will keep everybody posted once new news comes out. -

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Taxes on the movement of cargo

70% of cargo passing through the Port of Tacoma is bound for destinations outside of Washington state. This cargo is discretionary in nature—it does not have to pass through Washington state to get to its destination. Shippers could easily divert the cargo to ports in Canada, California, or the Gulf Coast if costs become too high

The Legislature’s Joint Transportation Committee, in a 2007 study, found that a tax as low as $30/TEU (twenty-foot equivalent unit container), or 1.5 percent per cost of moving a container, could divert as much as 30% of Washington cargo out of state. According to one report author, “Puget Sound container ports have significant competition and imposition of a fee could lead to a significant loss of container traffic…Decision makers should proceed with care.”

When the federal Harbor Maintenance Tax on cargo entering U.S. ports went into effect in 1997, cargo shifted to Canada. According to a 2012 Federal Maritime Commission study, approximately half of U.S.-bound cargo passes through Canadian ports primarily because of the cost impacts associated with the HMT. The Federal Maritime Commission went on to note that ports located outside of Washington state often market the tax benefits associated with diverting cargo away from ports in the Pacific Northwest.

The loss of discretionary cargo would mean a loss of family-wage jobs– not just longshore, but also railroad workers, truck drivers, distribution center employees, tug operators and more. For example, a 30% loss in cargo would result in an estimated loss of 9,416 jobs in Washington and $58.4 million in state and local tax revenue per year.

Increasing taxes on the movement of cargo threatens exports ,Washington exporters rely on imports to provide a cheap supply of empty containers to carry their goods during the “backhaul” to foreign markets. Increasing taxes on the movement of cargo has the potential of diverting discretionary import cargo away from the state, depriving Washington exporters access to those empty containers.

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ILA, USMX to Resume Master Contract Talks

The International Longshoremen’s Association and United States Maritime Alliance plan to meet next Tuesday to resume federally mediated negotiations on a dockworker contract covering East and Gulf Coast ports.  The scheduled three-day session in Galloway, N.J., comes after ILA President Harold Daggett and other union officials walked out a bargaining session Wednesday 1-9-13 with the New York Shipping Association over work rules and practices in the Port of New York and New Jersey.

 

Daggett cut short the talks with the NYSA after employers renewed proposals for improved productivity and changes to work rules that raise costs and require high levels of staffing at the port.  The ILA-NYSA contract is one of several local port agreements that supplement the coastwide master contract between the union and USMX, the umbrella group for employers along the East and Gulf coasts.

 

A threatened Dec. 30 ILA strike was averted when negotiators extended the coastwide and local contracts through Feb. 6 after agreeing on container royalties, one of the top issues in the coastwide agreement.  The extension and agreement on royalties allowed negotiators to turn their attention to local contracts, led by the one in New York-New Jersey. Both sides have linked agreement on the master contract to completion of bargaining on local contracts.

 

The Federal Mediation and Conciliation Service has been working with negotiators since before the current contract’s original Sept. 30 expiration. The contract was extended for 90 days before the latest short-term extension through Feb. 6.

 

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ILA Walks Out of NY-NJ Talks

The International Longshoremen’s Association broke off talks on a local contract covering work rules and staffing at the Port of New York and New Jersey, clouding prospects for a deal before the ILA’s Feb. 6 contract expiration.

 

The breakdown came in less than two weeks after a contract extension that averted a coast wide dockworkers’ strike on the weekend before New Year’s Day.  Last month’s extension of the union’s coast wide master contract with United States Maritime Alliance cleared the way for parallel negotiation of supplementary local contracts, led by the one covering New York-New Jersey.

 It was unclear how the break off would affect federally mediated negotiations set for next week between the ILA and USMX. The ILA and USMX agreed last month on container royalties, the per-ton payments that carriers have made on containerized cargo since the 1960s to support annual cash payouts to longshoremen.  The union and employers, however, remain far apart on what appears to be a stickier issue.

NYSA officials have said for more than two years that they planned to use the current negotiations to seek changes in the port’s work rules and practices, some of which predate containerization.  Unlike other ports that hire dockworkers in shifts, New York-New Jersey has a “continuous operation” system in which work gangs stay with a ship until its work is completed. The system requires extensive relief staffing, including the hiring of gangs with 15 or 16 members when only nine or 10 are working at a time.

ILA officials walked out shortly after the start of a scheduled two-day bargaining session. Wednesday’s abrupt halt to the New York-New Jersey talks is raising concerns among cargo interests, which are watching the negotiations closely and may have considered the negotiations substantially settled after last month’s master-contract extension.

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