US Navy Huckster Fat Leonard Gets A TV Show

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Banana Ships And The Hidden Fees Of Ship Cargo

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Seized Iranian Tanker Towed To Piraeus Port

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No Deal in West Coast Port Labor Negotiations as Deadline Passes

Negotiaions for a new labor contract for more than 22,000 dockworkers at U.S. West Coast ports have failed to reach a new agreement by today’s deadline, as both sides promise…

Negotiaions for a new labor contract for more than 22,000 dockworkers at U.S. West Coast ports have failed to reach a new agreement by today’s deadline, as both sides promise...

Fingers crossed as West Coast port labor talks head into overtime

Giant ship cranes extend over containers stacked on a ship with a FedEx truck on a bridge in the background.West Coast port employers and labor won’t extend their contract during bargaining, as business groups would like them to do.

Giant ship cranes extend over containers stacked on a ship with a FedEx truck on a bridge in the background.

The employers who operate West Coast port terminals and the union representing dockworkers on Friday rejected calls to extend their contract that was set to expire at 5 p.m. PST, but they promised to keep cargo moving without interruption until an agreement is reached.

“Both sides understand the strategic importance of the ports to the local, regional and U.S. economies and are mindful of the need to finalize a new coast-wide contract as soon as possible to ensure continuing confidence in the West Coast” as a competitive trade route, the Pacific Maritime Association and the International Longshore and Warehouse Union (ILWU) said in a joint statement Friday afternoon.

The fact that the sides are communicating with a single voice rather than issuing separate press releases in an effort to gain public support is considered a good sign by those familiar with the history of labor relations at the ports. The master contract covers 22,000 dockworkers at 29 U.S. West Coast ports, accounting for about 44% of U.S. container freight traffic. The main container gateway is at the twin ports of Los Angeles and Long Beach, Calif. 

More than 150 business groups earlier in the day urged the White House to push management and labor at West Coast ports on temporarily extending their contract to assure businesses, workers and consumers of supply chain continuity as the economy faces growing headwinds. 

Talks on a new five-year labor deal between the ILWU and West Coast employers, which began in mid-May, are taking place against a backdrop of recovery from the supply chain dislocations caused by COVID, record cargo volumes and congested container terminals, inland distribution challenges, product shortages and rising concerns about a potential recession. 

“Extending the current contract would provide additional certainty to all of the supply chain stakeholders that rely on the U.S. West Coast ports. This is even more important as we continue to experience supply chain disruptions and congestion for a variety of reasons,” the trade associations said in a letter to President Joe Biden. 

The lack of an official contract opens the door to pressure tactics, but both sides they are not preparing for a strike or lockout.

The leadership of the Pacific Maritime Association (PMA) and the ILWU met with President Biden at the White House on June 10 and committed to reaching a labor deal without any cargo disruption. The comments were viewed by many as a positive sign after three of the past four contract talks have resulted in disruptions, including work slow downs. The economic impact resulting from slowdowns during negotiations in 2014-2015 took about eight months to overcome. 

But fears of shipment delays remain as container volumes increase ahead of the traditional busy season for Asian imports. Many shippers have already rerouted cargo to ports on the East and Gulf coasts as a hedge against possible labor-related delays along the West Coast. Several of those ports, including the Port of New York/New Jersey, are now experiencing heightened congestion and vessel backlogs. 

Meanwhile, schedule reliability for container lines between Asia and the U.S. West Coast ports has plummeted to between 10% and 20%, according to Sea-Intelligence, a maritime data provider. And backlogs could increase as exports from China pick after the lifting of lockdowns in Shanghai and other cities last month. Although some retailers say they have too much inventory now the overstock appears to be category specific and many products are still in demand, including for the upcoming the Back-to-School season.

Los Angeles Port Director Gene Seroka said on Bloomberg TV that he expected the port will report its best June ever for container throughput.

The ILWU essentially has monopolistic power because West Coast ports must use its members to handle ocean shipments. 

“As we enter the all-important peak shipping season, we continue to expect cargo flows to remain at all-time highs, putting further stress on the supply chain and increasing inflation. Many expect these challenges to continue through the rest of the year. Even with the recent joint statement, supply chain stakeholders remain concerned about the potential for disruption, especially without a contract or an extension in place,” the letter said.

Signatories include the National Retail Federation, the National Association of Manufacturers, and the Toy Association. 

On Thursday, nearly two dozen Democratic lawmakers wrote the PMA and ILWU to stress the importance of working in good faith towards finalizing a new contract and ensuring the ports continue to function without interruption. 

Both sides are facing heavy political pressure to reach a resolution. Even though a large number of ILWU members make in excess of $100,000 per year, the union is framing the talks as being between mainstream American workers and foreign shipping lines that are earning record profits. At the same time, the pro-union Biden administration is struggling to gain control over record inflation that is battering the president’s approval ratings. A work slowdown or stoppage would exacerbate existing shipping delays, raising prices for many goods in addition to transportation costs. 

A former shipping line executive who has participated in previous ILWU negotiations, but didn’t want to be identified, recently said the promise to the president significantly tilts the scales to there being no work stoppage during contract talks. 

Clash over automation

The key issue on the table is automation, as well as pay and benefits. Shipping lines and their affiliated terminals view automation as the only way to handle compound annual growth of 3% to 4% when most ports have run out of physical space to expand. The union worries about job losses, but many experts say they will gain jobs in the long run as container volumes increase and that more jobs will be needed to operate and maintain the technology.

Nearly all ports in Northern Europe have automated truck gates and yards, as do many terminals in Asia. The Los Angeles/Long Beach complex has two semi-automated terminals, with another one under development. A study from the University of California at Berkeley, sponsored by the PMA, in early May showed that not only do automated terminals have as much as a 44% productivity edge over nonautomated ones, but that they also tallied more work hours for dockworkers. 

A study released Thursday by the Economic Roundtable, and funded by an ILWU grant, countered that automation at the Long Beach Container Terminal and the TraPac terminal in Los Angeles has eliminated 572 full-time jobs and $41.8 million in wages per year for longshoremen. 

The nonprofit urban research organization recommended that the cities of Long Beach and Los Angeles enact a displaced worker impact fee on any new automated equipment to offset public costs resulting from job loss caused by automation. It also said the state of California should enact a tax on automated terminal equipment equivalent to the revenue from income and payroll taxes when containers are moved by dockworkers without automated equipment. The San Pedro Bay ports shouldn’t approve plans to automate terminals unless it can be demonstrated that the automation will produce net benefits for California workers, the report added.

The shipping industry executive predicted the PMA will make a significant, one-time lump payment to the dockworkers to buy the right to automate in perpetuity. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch. 

Lawmakers plead for deal ahead of dockworker contract deadline

Biden Administration’s Offshore Drilling Plan Could Bring Up to 11 Lease Sales

By Ari Natter (Bloomberg) — The Biden administration opened the door to selling new oil and gas drilling leases in the Gulf of Mexico and Alaska in a move likely to…

By Ari Natter (Bloomberg) — The Biden administration opened the door to selling new oil and gas drilling leases in the Gulf of Mexico and Alaska in a move likely to...

DoD: Ukraine Sinks Russian Supply Ship With Harpoon Missile

Ukrainian forces used a Harpoon missile to sink a Russian resupply ship headed to Snake Island, a senior defense official told reporters Friday afternoon. The sinking of the ship helped Ukrainian forces retake Snake Island, which had been in Russian control since the early days of the invasion. The island, called Zmiinyi Ostriv in Ukraine, […]

Danish land-based Harpoon launcher in 2002.

Ukrainian forces used a Harpoon missile to sink a Russian resupply ship headed to Snake Island, a senior defense official told reporters Friday afternoon.

The sinking of the ship helped Ukrainian forces retake Snake Island, which had been in Russian control since the early days of the invasion. The island, called Zmiinyi Ostriv in Ukraine, was the symbol of Ukrainian resistance after a Ukrainian service member on the island told Russian warship Moskva to “go fuck yourself.” Ukraine later sank Moskva.

Ukrainian forces claimed it retook the island Thursday, CNN reported, although Russia claimed its forces left as a sign of good faith. The Russian claims are false, the senior defense official said.

“In fact, the way we view this development is that the Ukrainians were very successful at applying significant pressure on the Russians, including by using those harpoon missiles that they recently acquired to attack a resupply ship, and when you realize how barren and deserted Snake Island is, you understand the importance of resupply,” the defense official said. “So the Ukrainians made it very hard for the Russians to sustain their operations there, made them very vulnerable to Ukrainian strike.”

Retaking Snake Island can help the Ukrainians better defend Odesa as well as potentially begin to look at reopening shipping lanes, which would help Ukraine send out its grain.

However, the Russian blockade of the Black Sea continues to be the biggest naval challenge for Ukraine, the official said.

The United States on Friday announced an additional $820 million in aid for Ukraine, with some coming from the existing U.S. stock and the rest providing funding for equipment that will be built by the defense industry.

The U.S. will send additional ammunition for High Mobility Artillery Rock Systems (HIMARS) through the presidential drawdown, which means the U.S. will pull from its existing supply.

It will also send two National Advanced Surface-to-Air Missile Systems, 155mm artillery ammunition and four additional counter-artillery radars through the Ukraine Security Assistance Initiative.

The most recent package did not include any maritime elements, although the U.S. announced it was sending 18 coastal and riverine boats, as well as a vehicle-mounted Harpoon launcher in past assistance.

Of the 19 boats, six are Metal Shark maritime combat vessels and 10 are 34-foot, Dauntless Sea Ark patrol boats, according to the Department of Defense.

July 1 deemed ‘Bloody Friday’ in shipping due to stock drops

A container ship is traveling into a port.A shipping researcher dubbed July 1 “Bloody Friday” due to a large drop in stock prices for several shipping companies.

A container ship is traveling into a port.

Friday will “Hereby [be] known in #shipping as ‘Bloody Friday,’ ” J Mintzmyer, head of research at Value Investor’s Edge, tweeted.

Stock prices for shipping giants such as Zim Integrated Shipping Services (NYSE: ZIM), Genco Shipping (NYSE: GNK) and Eagle Bulk Shipping (NASDAQ: EGLE) experienced major drops Friday.

Experts said the decreases could be due to weakening manufacturing activity in the U.S. and a weakening demand for consumer goods as the country shifts to a post-pandemic economy.

Read: US import demand is dropping off a cliff

BofA downgrades Zim

Research analysts at BofA Securities on Friday downgraded Zim to underperform. BofA lowered its ocean multiple from 10x to 6x, below the multiple for Maersk due to higher levels of uncertainty. It also lowered Zim’s price objective from $79 to $40, 15% below the $47.23 at the time of the report.

The downgrade was based on “concerns over weaker U.S. demand.” The analysts said large American retailers have indicated spending on goods is falling and they have excess inventories.

Heightened demand for U.S. imports during the pandemic led to port congestion and skyrocketing ocean spot rates.

Given the slowing of consumer demand, “this congestion could unwind rapidly, in our view, driving a sharp correction in ocean spot rates,” the analysts said. “Zim’s largely chartered fleet and lower proportion of contracted volumes make it more exposed than other carriers to declining spot rates.”

Click here for more FreightWaves articles by Alyssa Sporrer.

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