ILWU & PMA REACH AGREEMENT

Per the JOC
Bill Mongelluzzo, Senior Editor | Feb 21, 2015 6:35AM EST
The tentative coastwide contract agreement that was reached Friday evening by the International Longshore and Warehouse Union and the Pacific Maritime Association, while most welcome, is just the beginning of a long process West Coast ports must endure to recover from the backlog of containers and vessels that have overwhelmed their operations the past four months, and to restore trust among shippers.
Industry experts agree that it will take months for Los Angeles, Long Beach, Oakland, Seattle and Tacoma — all among the 10 largest ports in the U.S. — to return to “normal” operations.

Customer advisory: November 2014

Months-long labor dispute continues to slow, even halt operations at West Coast ports!

The dispute between the maritime shippers and the International Longshore and Warehouse Union (ILWU), which represents 20,000 full and part-time dockworkers on the West Coast, has been brewing since the six-year contract expired July 1st. Since October, members of the ILWU have worked slowly and walked off the job, resulting in growing congestion during this critical harvest and impending retail season.

With more than two-thirds of all U.S. international trade moving through West Coast ports and Black Friday approaching, the Obama administration has met with the National Retail Federation and the National Association of Manufacturers to address the dispute. The six U.S. senators from California, Oregon and Washington sent an open letter to both parties, seeking to prevent the slowdowns from escalating to a complete shutdown.

We will continue to monitor this crucial situation and work diligently to deliver your shipments as quickly and efficiently as possible. We will also communicate with you closely on each shipment effected and keep you informed as negotiations ensue.

STRIKE AVERTED – 6 YEAR CONTRACT SIGNED

 Feb  2013:  Great news has arrived in our emails this morning. The International Longshoremen’s Association and United States Maritime Alliance reached tentative agreement on a six-year contract late Friday night.   While this agreement is still yet to be ratified, freight should continue to move as booked without fear of delay, re-routing, or the dreaded “Port Congestion Surcharge”. This will come as a great relief to exporters and importers, especially following the strain and costs caused by the recent strike on the USWC.

East & Gulf Coast Labor Contract Update

The ILA contract covering most of the East and Gulf coast ports expired on 09/30/2012.  The ILA and the USMEX agreed to extend the contract until 12/29/2012, to keep the ports open and working.  However, at this time a resolution is not expected as both sides appear to be far from agreement.  Statements from the trade community have indicated they plan to send a letter urging both parties to seek a quick resolution, hoping to avoid port closures.  Port closures would be very damaging to exporters and importers alike, as witnessed by the LA/LGB strike.

HANJIN ANNOUNCES LA/LGB CONGESTION SURCHARGE

Due to the congestion created by the 8 day strike at the LA/Long Beach terminals Hanjin has announced the following Westbound US to Far East/Asia/Australia Congestion Surcharge.

Effective:                  December 10th, 2012

Expiration:                 December 28th, 2012

Application:    IPI Cargo Via Long Beach, CA, Los Angeles, CA Ports 

Amount:         $160/20’        $200/40’

Note: Applicable to all container types

LA-Long Beach Strike Resolved 12/04/2012

An agreement has been reached, ending the eight-day strike that closed 10 of 14 terminals in the largest US port.

North Star Container is pleased to announce diversions and delays have been at a minimum. We can still expect delays, as 8 days of stoppage have congested the ports. Los Angeles and Long Beach handle nearly half of all cargo that arrives in the US by sea.  Containers have stacked up on the dock, rail yards or, in many cases, remained on arriving ships.  Some of those ships were diverted to other ports along the west coast.  As work resumes vessels that were diverted will be re-worked into the schedule.

Midwest Shippers Association calls for STB to change regulatory “Exemptions”; more oversight of inland rail intermodal service

The Midwest Shippers Association (MSA) has filed a statement with the U.S. Surface Transportation Board (STB) calling for changes in current STB policies to establish increased oversight of intermodal rail service and other rail freight now unregulated under the agency’s “Exemptions” categories.

MSA filed written comments for the hearing the STB will officially hold on February 24 in Washington, D.C. The hearing had earlier been set for December 9, 2010 but was postponed at the request of stakeholders, including railroad trade associations to give them time to respond. January 31 was the deadline for filing written comments.

Midwest Shippers called for changes in the current regulatory exemptions policies for certain commodities, certain box car service and essentially for all intermodal container rail service.

MSA made several measured recommendations, according to Bruce Abbe, MSA executive director, including:
- Establishing reporting and increased transparency in rail intermodal shipping rates and services;
- Reasonable repositioning rates for moving containers to areas where they are needed;
- A closer relationship of intermodal rates to distances and actual costs;
- And maximizing short line railroads’ ability to contribute to the intermodal system, to improve hub and spoke systems for assembling larger volume trains.

“Midwest Shippers Association fully understands and supports that both the railroads and the ocean carriers need to be profitable enterprises. We depend upon them to deliver our products worldwide, and we know they need to make money – just as our member grain exporters’ businesses must be profitable to continue to provide the valuable service they provide,” Abbe said.

“We do not believe, however, this should mean extreme profits that comes at the expense of shippers and our customers to the extent that it threatens the sustainability or existence of our supply chain businesses.”

Effort needs to be made to mitigate trade competitiveness problems caused by increasing rate disparities between the one or two favored North America inland large population areas, compared to other large and moderate population areas the intermodal rail lines now run through. Abbe cited growing rate disparities for shippers using the Upper Midwest Twin Cities and Omaha area container rail yards, compared to the large Chicago and Toronto, Canada intermodal rail served areas, noting the disparities threaten the competitiveness and sustainability of many Upper Midwest agricultural premium grain and soybean exporters.

Key inland rail container yards, notably the Twin Cities yards, often experience shortages of equipment for exports, sometimes desperately so, Abbe noted.

“Intermodal container shipping is a critical factor for America’s export competitiveness. Yet the system’s interdependent rail and ocean carrier partners now gear their operations largely to serving importers. If we are not using it as it is capable of being used to serve our exports, then we are figuratively and literally missing the boat,” Abbe said.

“We urge the Surface Transportation Board to take steps to change the current blanket exemption from any regulation of intermodal rails service, and to establish reasonable oversight practices and procedures that will lead the rail intermodal industry to adopt fairer, more appropriate rates and services to serve America’s exporters and importers,” Abbe said.

The place to start is to “lift the veil the industry maintains over its real intermodal rates and service practices” through their current strict confidentiality requirements.
To view the full Midwest Shippers Association comments to the STB hearing, contact: info@mnshippers.org to request a copy.

The Midwest Shippers Association is a regional trade association cooperative made up of producers, processors, interntional traders and exporters of grain, oilssed and food ingredient products based in the Upper Midwest states of Minnesota, North and South Dakota, Iowa and Wisconsin. MSA’s membership also includes shipping logistics and grain industrsy service suppliers. MSA’s members export premium value grains and oilseeds to international customers worldwide.

Source: Midwest Shippers Association, February 5, 2011

Growth continues in railroad movements of ethanol, distillers grains — USDA

Rising crude oil prices and continued demand for renewable fuels and distillers grain has kept ethanol production profitable in 2010. Railroads remain the primary mode for moving ethanol and distillers grains, with increased movements consistent with growth in production of ethanol and distillers grains.

According to the U.S. Energy Information Administration monthly and weekly data, U.S. ethanol production in 2010 reached 13.4 billion gallons with plant capacity utilization rates above 95 percent for most of the year. This production level now approaches the 15-billion gallon per year (bgy) cap set by the 2007 Energy Law (EISA/RFS2) for corn starch ethanol by 2015.

Despite the recent announcement by the Environmental Protection Agency (EPA) that automobile models newer than 2001 are now able to use E-15, the 15-bgy corn starch ethanol cap and the slow pace of commercialization of the next generation biofuels, are the primary reasons for the projected slower growth rate of ethanol production in 2011.

During the first three quarters of 2010, U.S. ethanol production reached 9.7 billion gallons, up 23 percent from the same period last year. During that period, the major railroads in the United States moved 274,486 rail carloads of ethanol, up 26 percent from the previous year. Higher utilization of unit trains (trains with 80-100 railcars) and more rail-accessible blending terminals may be the primary factors for this increase.

For most of 2010, shippers of distillers grains continued to increase their reliance on rail service. During the first three quarters of 2010, railroads moved 65,909 carloads of distillers grain, up 32 percent from the same period last year.

The growth in movement of distillers grains by rail has been faster than that for ethanol, possibly due to the growing export market, which relies on rail transportation to deliver the product to port from the ethanol production regions in the Midwest.

During the first 11 months of 2010, exports of distillers grains totaled 8.2 million metric tons, up 47 percent from the previous year.

The outlook for ethanol in 2011 is mixed. Profitability of ethanol production is threatened by rising grain prices due to tighter global supplies. However, EISA/RFS2 mandates and the rising petroleum prices could mitigate price risk, enabling ethanol producers to maintain capacity utilization rates and keep moving the product to market via rail.

Source: USDA Grain Transportation Report, February 10, 2010

Agriculture Exporters Praise FMC

U.S. agriculture exporters are praising a Federal Maritime Commission fact-finding investigation into vessel and container capacity, and recent initiatives by the agency that it says will help exporters.

Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said there has been a “turn in attitude, a sea change in view of the purpose of the FMC. It has been highly constructive.”

In the past, Friedmann said he and others did not view the FMC as “an entity trying to facilitate exports. To the extent that they are now, that is a welcome development.” He praised comments from FMC Chairman Richard Lidinsky that he will work to assure sufficient capacity for agriculture exports.

“The people who have been most involved in moving the legislative and regulatory process forward, that is the agricultural exporters, are very supportive of what the FMC is doing,” he added.

Friedmann noted AgTC members testified before Congress in hearings that eventually led to the introduction of a bill by Rep. James Oberstar, D-Minn., to eliminate antitrust immunity for liner carriers and give additional powers to the FMC. Group members also participated in the FMC capacity investigation, and in face-to-face discussions with ocean carriers initiated by the FMC this summer.

AgTC’s praise for the FMC probe contrasted with criticisms leveled by the National Industrial Transportation League, which expressed disappointment in the limited amount of information the FMC has released about the fact-finding investigation, and what it said was a suggestion by the FMC that “the solution to the problems experienced by U.S. exporters and importers be developed through collaboration between ocean carriers and their customers with the FMC taking on the unconventional role of a commercial facilitator.”

The NIT League suggested it might seek more information about the FMC investigation through a Freedom of Information Act filing, “with all appropriate redactions to protect the identities of those interviewed.”

Friedmann said the decision by FMC Commissioner Rebecca Dye to interview shippers confidentially during the fact-finding investigation “provided an environment in which they could get real information and real experiences from shippers and forwarders who otherwise would not have come forward.” He added, “exposing that information or those individuals who testified would be not only a tremendous breach of faith but I am not sure legally they could do so.”

Another group, the Pacific Coast Council of Customs Brokers and Freight Forwarders, also issued a statement applauding the actions of the FMC, saying many of its members had participated in the fact-finding investigation and said the FMC had been “true to its word to keep these interviews with forwarders and shippers confidential; had it not made that commitment, many forwarders and shippers would not have come forward, and the Commission would not have the information it needed in order to initiate solutions to their concerns.”

Friedmann said he was pleased with actions taken by the FMC as a result of the fact-finding investigation.

These include the creation of so-called “rapid response teams” to mediate disputes between shippers and carriers.

“Those are not to be underestimated, they are precisely what many shippers need, and what in fact agriculture exporters are utilizing right now,” he said. He said they are designed by the FMC to help in “the real process of ocean shipping, when there are hiccups in the process which are undermining agricultural exports.

“For example, if accurate and timely bills of lading cannot be obtained before a letter of credit expires, major agricultural exports cannot be made, sales fall through. The FMC has committed resources to addressing that very real problem.

Friedmann also praised the FMC’s decision to form “working groups” to address issues such as service contracts and container availability.

He said the FMC said it would initiate the service contract review after its investigation found “smaller shippers could use some assistance in understanding ocean transportation contracts and in gaining provisions that were fair. I think that there was a sense … that smaller shippers, in particular, do not have the negotiating leverage to get provisions that many would say would be reasonable.”

Friedmann noted that six agriculture exporters participated in face-to-face meetings arranged by the FMC with six senior carriers executives this summer.

He felt these were “very constructive” and said “this hasn’t happened before and again it is a change in the commission’s view of what it can do to facilitate commerce in a non-adversarial way.”

Will meetings like this have a long-term benefit on large numbers of shippers?

“Time will tell,” he said. “The FMC has been around since 1961, and we are three months into the FMC taking a different approach which is open and welcoming to exporters and importers.” — Chris Dupin

Capacity Constraints, Take Two

Supply and demand are falling into balance next year, but a second wave of tight supply is already appearing on the horizon.

Shippers are more likely to find supply and demand in better balance going into the new year, a year after burgeoning U.S. import and export demand outstripped the supply of ships and sent companies scrambling for vessel space.

But some industry observers and carrier executives warn a second wave of constrained capacity is forming, a wave they say is fed by an ongoing restraint in the market for ship finance, and which could leave shippers facing tight capacity again as early as 2012
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Ocean carriers have brought laid-up vessels back into service and are taking delivery of enough new ships to meet expected demand in 2011. They’re also sending messages, however, that they will carefully manage supply and will not deploy more capacity than immediately needed.

Carriers and analysts alike say there will be plenty of capacity available to handle any growth in demand next year, but even that ship capacity is not the whole story for many shippers. Container equipment, operators say, still will be in short supply in 2011.

“The slow recovery has affected the mindset of the people who build containers, so there’s been a capacity reduction all across the chain, not just the people who build ships, but also containers,” said Ron Widdows, CEO of Neptune Orient Lines, parent of container ship operator APL.

The two Chinese companies that make containers have restarted production, but are not yet producing enough boxes to meet expected needs next year, and those they are making are expensive — $2,700 for a 20-foot container, compared with $1,500 per box three years ago, Widdows said.

The potential constraint on container supply is one part of what a growing lineup of freight industry executives is warning will be a kind of delayed impact of the 2008-09 downturn.

The cutbacks in capacity and costs, they say, have left carriers just as focused on lean inventory as their customers, with little enthusiasm or financial backing to bring back capacity in big numbers.

That’s especially true, some say, in the United States, where transport networks contracted sharply during the deepest economic downturn in generations.

“It won’t be long, if we get any kind of good economy, until we’re back where we were in 2006, with chronic shortages of truck and rail capacity,” Matthew K. Rose, chairman, president and CEO of BNSF Railway, told attendees at this month’s Transcomp/Intermodal Expo meeting.

The Journal of Commerce Magazine – News Story

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