Tag: ILWU

Creditor challenges bankruptcy plan of ILWU dockworkers union

Terminal operator ICTSI has not given up its quest for tens of millions in damages from the West Coast longshore union.

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One of the world’s largest and highest-profile dockworker unions, the International Longshore and Warehouse Union (ILWU), filed for Chapter 11 bankruptcy protection on Sept. 30, seeking to shield itself from a crippling damage award owed to Philippines-based International Container Terminal Services Inc. (ICTSI).

But the bankruptcy filing is not the end of the saga. The legal battle continues.

Under the proposed reorganization plan, the ILWU would give $6.1 million to terminal operator ICTSI, which is substantially all of its remaining cash, then “rebuild” over the coming years, finally closing the book on a courtroom fight with ICTSI that began in 2013.

The hearing to confirm the reorganization plan will not take place until February at the earliest. In the meantime, ICTSI is crying foul — and telegraphing arguments it will make to oppose the plan’s confirmation.

ICTSI has argued that ILWU’s bankruptcy filing is “what appears to be forum shopping” and expressed concerns that “the full nature and extent of the debtor’s assets have not been fully disclosed.”

ILWU — a small business?

The ILWU filed its case under bankruptcy law’s Subchapter 5, a streamlined process that applies to small businesses with debts of $7.5 million or less. (That ceiling was previously $2.7 million, but was raised in March 2020 as part of COVID relief legislation.)


A jury in Oregon decided in November 2019 that the ILWU owed ICTSI $93.6 million in damages for unlawful labor practices starting in 2013 at ICTSI’s terminal in Portland, Oregon.

A judge ruled in March 2020 that the award was too generous and set maximum damages at $19.06 million — if both sides agreed. 

ICTSI didn’t agree, so a new trial on damages was set to begin in February 2024, with ICTSI seeking $48 million-$142 million this time around. 

Because the damage amount had yet to be confirmed when the ILWU filed for bankruptcy, it didn’t count against the $7.5 million debt limit, and the ILWU, which has no bank debt, qualified under Subchapter 5.

Debt is deemed “liquidated” when the amount is legally certain. “This debt has not been liquidated,” said Judge Hannah Blumenstiel of the ICTSI damages during the initial Chapter 11 hearing in October.

“Eligibility [for Subchapter 5] is determined as of the petition date. And I don’t think there’s any argument to be made that this debt was liquidated as of the petition date.”

This month, a hearing before Blumenstiel on the ILWU case was preceded by a bankruptcy hearing for a pancake restaurant called Stacks. How can a union with 40,000 members serving ports from Los Angeles to the Pacific Northwest — whose president, Willie Adams, speaks with President Joe Biden — fall in the same category as Stacks?

The answer is that the ILWU bankruptcy case only applies to the union management division that lobbies and educates, which has four officers and 21 support staff. “The locals and affiliate unions are separate legal autonomous entities and are not debtors or otherwise involved in this Chapter 11 case,” said Adams in his affidavit.

ICTSI’s main focus now is to shed light on how separate these entities are for the purposes of the bankruptcy case, with the goal of derailing confirmation of the proposed plan.

Its implied argument is that the ILWU could have a lot more assets than it lists and shouldn’t be allowed to hide from the decade-long Oregon litigation using a bankruptcy shield for one portion of its structure.

Alleged ‘entanglement’ with Longshore Division

ICTSI specifically highlighted the ILWU’s Coast Longshore Division (CLD). According to the ILWU’s website, “The core of the union, historically, has been the Longshore Division.”

The terminal operator said in a filing on Nov. 9, “Discerning the true nature and extent of the relationship between the debtor and the CLD has predictably been a primary focus of ICTSI in the discovery process.

“The various overlaps in management, operations and potentially assets between the debtor and the CLD, and the absence of any mention of the CLD in the debtor’s schedules of assets and liabilities or statement of financial affairs, other than three transfers made within 90 days prepetition, are anticipated to arise in connection with plan confirmation.”

ICTSI said that the ILWU’s general counsel, Lindsay Nicholas, provided testimony at creditor meetings on Oct. 24 and Nov. 6 on the debtor’s connections to and interactions with the CLD.

According to ICTSI, Nicholas testified that the CLD is currenting paying ILWU legal fees on 11 of its 12 litigation cases — the ICTSI litigation being the sole exception.

“Nicholas testified that, for more than a decade, the CLD also paid the ILWU’s legal and defense fees incurred in connection with the ICTSI litigation. However, on the eve of the debtor’s bankruptcy filing, the CLD stopped such payments and that obligation moved to the debtor.”

ICTSI also pointed to annual financial reports called LM-2 forms that unions file with the Department of Labor. 

“Nicholas testified that the CLD historically listed the contingent liability associated with the ICTSI litigation on its own LM-2 forms,” but this was “transferred to the ILWU mere months before the debtor’s bankruptcy filing.”

“ICTSI is coming to appreciate the extent of the entanglement between the debtor and the CLD. ICTSI is further concerned that this type of entanglement and overlap could extend to other divisions and entities under the broader ILWU organizational umbrella.”

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How a fight over 2 jobs bankrupted union of 40,000 dockworkers

The Chapter 11 filing of the ILWU dockworkers union dates back to a dispute over two electrician jobs in Oregon a decade ago.

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In October 2021, Willie Adams, president of the International Longshore and Warehouse Union (ILWU), sat across the table from President Joe Biden at the White House. The two met again at the White House last month, celebrating the new six-year labor contract for America’s West Coast ports.

“I’ve known Willie for a long time,” said Biden after the latest meeting. “I was kidding him: I said I want to know who his haberdasher is. He looks awfully good, doesn’t he? I like that cut.”

Just a few weeks later, Adams is engaged in a far less prestigious task: securing Chapter 11 protection for his union in the Bankruptcy Court of Northern California.

Adams proposed a restructuring plan in a court filing Monday calling for the ILWU to hand over substantially all of its remaining cash — $9.5 million — save for “a reserve for working capital necessary to enable the ILWU to maintain its operations and rebuild.”

The recipient of the proposed payout: International Container Terminal Services Inc. (ICTSI), a global terminal operator based in Manila, Philippines.

The irony is that the bankruptcy of one of America’s highest-profile unions, representing over 40,000 workers, whose president hobnobbed with Biden, began with a feud over two electrician jobs a decade ago at a niche container facility in Portland, Oregon.

New trial too expensive for ILWU to bear

A jury decided in November 2019 that the ILWU owed ICTSI $93.6 million in damages for unlawful practices including work stoppages, slowdowns and other coercive actions starting in 2013 at the ICTSI terminal in Portland.

The terminal lost its shipping line clients and ICTSI terminated its lease in 2017, paying over $11 million in penalties to get out early (it had signed a 25-year lease in 2010).

Oregon District Court Judge Michael Simon ruled in March 2020 that the jury award was far too generous. He set maximum damages at $19.06 million — if the two sides would agree. If not, there would be a new trial on damages. ICTSI didn’t agree.

The appeals process is over on arguments about guilt or innocence: By law, ILWU owes ICTSI. The new trial on damages was set to begin in late February 2024. ICTSI was seeking $48 million-$142 million.

The ILWU estimated that it would have to pay $8.5 million in additional legal fees during the new trial on top of any damages awarded, thus the Chapter 11 filing that halts the trial process.

A decade-old ‘symbolic’ dispute

The events leading up to the current situation were recounted in the 2020 ruling by Simon.

They occurred years before Adams was elected president of the ILWU in 2018, before COVID and the supply chain crisis put West Coast dockworkers in the spotlight in 2021-2022, and before contentious negotiations on the new labor contract spawned fresh supply chain fears in early 2023.

When ICSTI began operating Portland’s Terminal 6 in 2010, jobs for electricians plugging, unplugging and monitoring refrigerated containers (reefers) continued to be controlled by the Port of Portland, which assigned them to two electricians of a rival of union of ILWU, the International Brotherhood of Electrical Workers (IBEW).

This conflicted with the labor contract between the ILWU and the Pacific Maritime Association (PMA), the organization that represents West Coast terminals. The contract called for ILWU members to handle reefer jobs at PMA-member terminals, including Portland’s.

The Portland dispute wasn’t just about the two electrician jobs, it was about the principle, according to ILWU testimony.

As recounted by Simon, “ILWU National’s then-President Robert McEllreth testified that the Terminal 6 reefer jobs were ‘symbolic’ of jobs ‘up and down the coast’ and that to ‘let those jobs go … would bleed up and down the whole entire West Coast and … would undermine the contract.’”

Leal Sundet, then an official of ILWU National, testified that “any time you have a contractual matter that any one given PMA employer refused to comply with, that’s an assault on the fabric of the [labor] agreement. Because why would the next PMA employer need to comply with the agreement, and the one after that? If you let the PMA member companies start picking and choosing what parts they’re going to comply with, then you don’t have a contract any longer.”

After ICTSI terminated its lease in 2017, the Port of Portland, the PMA and the ILWU agreed that the reefer jobs would be handled by ILWU members in future container operations at Terminal 6. But by that time, the damage was done. The ICTSI lawsuit — which would eventually result in ILWU’s Chapter 11 filing — had been set in motion.

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Dockworkers’ Union ILWU Files for Chapter 11 Amid Decade-Long Legal Battle

Oct 1 (Reuters) – The International Longshore and Warehouse Union (ILWU) representing U.S. dockworkers has filed for a chapter 11 bankruptcy protection to resolve a pending litigation with the Oregon affiliate of the International…

Oct 1 (Reuters) – The International Longshore and Warehouse Union (ILWU) representing U.S. dockworkers has filed for a chapter 11 bankruptcy protection to resolve a pending litigation with the Oregon affiliate of the International...

ILWU dockworkers union files for Chapter 11 bankruptcy protection

Just when it looked like West Coast port labor drama had dissipated, the ILWU has filed for bankruptcy protection.

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The International Longshore and Warehouse Union (ILWU), which represents dockworkers at ports along the Pacific coast of the United States and Canada, filed for Chapter 11 bankruptcy protection just before midnight on Saturday.

The ILWU “will continue to operate as usual throughout the restructuring process,” the union said in a statement on Sunday morning. It plans to “continue honoring its employee and payroll obligations in the ordinary course of business.”

The bankruptcy filing was precipitated by a massive damage award in a case involving a long-running legal dispute between ILWU Local 8, the union chapter in Portland, Oregon, and terminal operator ICTSI Oregon.

In November 2019, a jury found that the union had engaged in unlawful practices in 2013-2017, including work stoppages, slowdowns, “safety gimmicks” and other coercive actions.

After a 10-day trial, the jury awarded $93.6 million in damages to ICTSI, which, if enforced, was expected to push the ILWU into bankruptcy. The jury found that ILWU National was responsible for 55% of ICTSI’s damages, and Local 8 was responsible for 45%.

In March 2020, Oregon District Judge Michael Simon dramatically reduced the amount due, ruling that damages should not exceed $19.1 million. However, even that amount is too high for the union to pay.

The two sides are currently filing briefs regarding the final extent of damages. The ILWU argued in a court filing on Friday that ICTSI’s damages “are non-existent or minimal, at most $3.9 million.”

ILWU filed financial documents as part of its voluntary Chapter 11 petition in the Northern District Court of California. It listed current assets of $11.6 million, including $9.5 million in cash, far below the maximum amount in the judge’s 2020 ruling.

ILWU responds to ‘scorched-earth litigation tactic’

According to ILWU President Willie Adams, “While we have attempted numerous times to resolve the decade-long litigation with ICTSI Oregon, at this point, the union can no longer afford to defend against ICTSI’s scorched-earth litigation tactic.

“We intend to use the Chapter 11 process to implement a plan that will bring this matter to resolution. The officers are confident that we are taking the right step to put our organization on the best path forward — and we are optimistic for all that is ahead.”

The ILWU Chapter 11 filing comes a month after the union ratified a new six-year labor contract with the employers’ group, the Pacific Maritime Association, ending the threat of labor-dispute-related slowdowns at West Coast container ports. Concerns over port labor issues have led to a shift in container shipping volumes to East and Gulf coast ports over the past year.

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ILWU Canada Votes To Accept Port Labor Agreement

by David Ljunggren (Reuters) – Dock workers in western Canada voted to accept an improved labor contract after a month-long dispute that affected trade and disrupted operations at the country’s busiest ports,…

by David Ljunggren (Reuters) – Dock workers in western Canada voted to accept an improved labor contract after a month-long dispute that affected trade and disrupted operations at the country’s busiest ports,...

It’s over: Labor deal ends strike at Vancouver, Prince Rupert ports

The extended strike in western Canada was beginning to affect U.S. supply chains. Its resolution limits the fallout.

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After being shuttered for 13 days, the key container shipping ports of Vancouver and Prince Rupert in British Columbia, Canada, will open “as soon as possible” after a new labor deal was reached, the British Columbia Maritime Employers Association (BCMEA) announced Thursday.

The tentative agreement has a four-year term and is subject to ratification by both parties. No details were disclosed. The announcement of the end of the port labor impasse came after a federal mediator delivered recommendations to both sides with a tight deadline to respond.

Impact on US imports

The near-two-week strike led to a virtual shutdown of containerized rail imports from Vancouver and Prince Rupert to the U.S. Even though the British Columbia ports will reopen soon, the effect on the flow of U.S. imports via the Canadian gateways will linger. Canadian railway CN told FreightWaves that disruptions could take weeks or even months to correct.

Data from FreightWaves SONAR that tracks rail moves of loaded international containers from Vancouver and Prince Rupert shows a near-total collapse in volumes as a result of the strike.

Blue line: International rail containers from Vancouver. Green line: from Prince Rupert. (Chart: FreightWaves SONAR)

That said, the two Canadian ports’ contribution to total U.S. imports is relatively small, so the strike’s effect on the U.S. was much less significant than on Canada.

Jonathan Gold, vice president for supply chain for the National Retail Federation, said on July 7 that the strike “shouldn’t have a major impact here but could affect some U.S. retailers whose merchandise comes in through Canada.”


Ship-position data from MarineTraffic shows that as of Thursday afternoon, there were eight container ships waiting to be served by the Port of Vancouver and four container ships in the queue off Prince Rupert, roughly the same number that were waiting on Sunday.

Container ships off Vancouver as of Thursday (left); off Prince Rupert (right). (Maps: MarineTraffic)

West Coast labor disruptions end

The announcement of a labor agreement in Canada draws to a close a protracted period of labor unrest along the Pacific coast of North America, in once case, involving International Longshore and Warehouse Union (ILWU) Canada conducting an strike that began July 1, and in the other, involving the U.S. branch of the ILWU slowing port operations as negotiations dragged on.

The labor unrest had threatened a new flare-up for U.S. supply chain issues following the much more extreme disruptions seen in the COVID era. That threat is now gone.

The U.S. ILWU and terminal employers announced a tentative agreement on June 14. During a press conference Wednesday, Port of Los Angeles Executive Director Gene Seroka outlined the timetable for ratification of the U.S. ports deal.

“The ILWU will proceed with a democratic process involving a delegate caucus that represents all 29 [U.S.] West Coast ports later this month,” said Seroka. “These delegates will review the contract and determine whether to present it to a vote among the rank and file. Historically, it has taken about three months from the time a tentative agreement is reached until a full membership ratification happens.”

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West Coast port labor deal reached; peak season chaos averted

The U.S. supply chain has dodged a bullet. A new dockworker labor deal will keep the peace at West Coast ports.

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Negotiations on the West Coast port labor contract dragged on for months longer than expected, with tempers flaring along the way. Work disruptions began affecting ship schedules and container dwell times over the past two weeks. It now appears that more that significant fallout to the supply chain has been averted: A deal has been reached.

Late Wednesday night, the Pacific Maritime Association (PMA), representing the terminals, and the International Longshore and Warehouse Union (ILWU), representing workers, announced a tentative agreement on a new six-year contract.

No details were released and the agreement is still subject to ratification by both parties.

Acting Labor Secretary Julie Su had flown to San Francisco to meet with the parties on Monday and “played a key role” in the reaching the agreement, according to the ILWU and PMA.

PMA President James McKenna said the new contract agreement “recognizes the heroic efforts and personal sacrifices of the ILWU workforce in keeping our ports operating [during the pandemic and supply chain crisis].”

ILWU President Willie Adams said the union will now “turn our full attention back to the operation of the West Coast ports.”

Deal averts peak season disruptions

Reaching an agreement prior to peak season was crucial for all parties. Doing so avoided political fallout to the Biden administration from pre-holiday congestion headlines. The ILWU avoided reputational fallout from holding up Christmas cargoes to increase wages that were already relatively high. And the PMA averted losses to port productivity during peak season, which translates into more terminal profits.

Volumes to the West Coast have been seasonally rising, in line with pre-pandemic patterns. The Port of Los Angeles handled 409,150 twenty-foot equivalent units of imports in May, up 19% from April and up 64% from the recent low in March.

As of Monday, there were 58 container ships en route to the ports of Los Angeles and Long Beach from Asia, compared to 46 a month before and 47 two months prior.

Port of Los Angeles Executive Gene Seroka said his port is operating at about 70% of capacity. Of the 30% shortfall, he said half was due to macroeconomic issues and half was due to cargo switched to East Coast and Gulf Coast ports as a result of labor concerns at West Coast ports.

“If we can get a labor deal soon and the economy doesn’t falter, we’ll have a strong second half,” Seroka said on Tuesday.

They got the labor deal. Now it’s up to the economy.

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Confusion reigns as labor dispute ‘fog’ blankets West Coast ports

“Patience is wearing thin. Neither side imagined it would take this long,” says the head of the Port of LA on dockworker contract talks.

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There’s the fog of war and there’s the fog of West Coast port labor disruptions.

More than a year after negotiations began and over 11 months since the last contract expired, employers and dockworkers still haven’t come to terms over pay. Accusations are flying. Those speaking to the press have agendas, as do those remaining largely silent.

Relations took a major turn for the worse starting in early June, with no resolution in sight. Acting Labor Secretary Julie Su arrived in San Francisco to meet with the two sides Monday and remained at the table on Tuesday.

Media coverage is warning of a renewed supply chain crisis, but data on ship movements and cargo operations is not particularly alarming — at least, not yet.

‘Confusing for all of us’

“These past couple of weeks have been challenging and at times confusing for all of us out here at the West Coast ports. There have been claims, counterclaims and daily concerns,” said Port of Los Angeles Executive Director Gene Seroka during a press conference Tuesday.

“Of course, we’re all concerned. The deal’s not done yet. Patience is wearing thin. Neither side imagined it would take this long.”

Seroka acknowledged that there have been spot shortages of workers and a “handful of bad days” with “slower moving containers than we’d like to see and longer lines on occasion for trucks, and we’ve had terminals not open their truck gates due to a shortage of labor or other business decisions.” Nevertheless, Seroka maintained that “the data suggest that the overall impact has been minimal” and “the cargo is flowing.”

Highlighting how different parties are putting out different spins, the commentary on the situation in Los Angeles from the Pacific Maritime Association (PMA), representing terminal employers, is more dire than from the Port of Los Angeles itself, or from the International Longshore and Warehouse Union (ILWU).

PMA-ILWU war of words

According to the PMA, the “concerted and disruptive work actions” by the ILWU effectively shut down Los Angeles and Long Beach on June 2 and “shut down or severely impacted terminal operations” in Oakland and Hueneme, California, and Seattle and Tacoma, Washington, that day.

The PMA said work actions continued to disrupt terminals in Los Angeles, Long Beach and Oakland over the weekend into the following Monday, June 5. But a Port of Los Angeles spokesperson told FreightWaves it was “a one-day event that impacted some of our terminals to varying degrees on Friday. All terminals in LA are open [as of June 5].”

Last Friday, the PMA said ILWU work actions had resumed after a pause, with the union refusing to dispatch lashers, the workers who secure and unfasten containerized cargoes, in Los Angeles and Long Beach. The PMA also said the ILWU had effectively shut down the Port of Seattle on Saturday.

Asked whether Seattle had been shut down, the Northwest Seaport Alliance, which manages Seattle and Tacoma, told FreightWaves: “Each terminal operator is making its own decisions regarding operations, which vary across our gateway. Our gateway remains open, with the level of operations varying by terminal and in each harbor.”

ILWU President Willie Adams said on Saturday, “Despite what you are hearing from the PMA, West Coast ports are open.” The ILWU said the PMA “continues using the media to leverage one-sided information in an attempt to influence the process.”

On Monday, the PMA disputed Adams’ statement on ports being open and accused the ILWU of resuming its practice of withholding lashers in Los Angeles and Long Beach.

Seroka said he couldn’t point to “any one job class, any one work group or any one employer” when asked on Tuesday about allegations that the ILWU was withholding lashers in Los Angeles. “I’m not going to validate one view against another,” he said.

Data shows mixed fallout so far

Amid all the conflicting agendas, data on the labor disruption fallout is mixed. It shows little impact in some cases. In others, it does show fallout, with different ports seeing varying impacts on imports versus exports.

Seroka cited data showing that dwell time for all containers on LA port terminals had decreased 9% over the past month and dwell time for on-dock rail containers was down 18%, with the number of on-dock rail containers down 14% over the past month.

Ship-position data from MarineTraffic showed nine ships waiting offshore of U.S. West Coast ports on Tuesday (one off Long Beach, two off Oakland and six off Seattle/Tacoma). But the same number of ships were waiting off East and Gulf Coast ports, where there are no labor disruptions, and the West Coast queue was negligible compared to the queue during the supply chain crisis, when there were close to 100 container vessels off West Coast ports for months.

Weekly average data from project44 on the average dwell time for inbound boxes has risen recently, but not significantly.

Blue line: Oakland export dwell time. Green line: Long Beach. Orange line: Los Angeles. Purple: Seattle. (Chart: FreightWaves SONAR)

However, daily data from project44, which is more volatile, shows more dramatic changes. It shows that dwell time for export containers in Long Beach and Oakland have risen well above dwell time for import containers in recent days, while the opposite situation prevails in Seattle, where import containers are dwelling much longer than export boxes.

(Charts: project44)

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Labor unrest, canal woes could complicate ‘normal’ peak season

This year’s peak season could see West Coast labor disruptions coincide with Panama Canal water levels impeding cargo flows to the East Coast.

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May import numbers are in and yet again, the trend is closely aligned with pre-COVID levels in 2018-2019. But there are two big differences between now and then.

Port labor disruptions are now impacting Asian cargo flows to the West Coast and low water levels in the Panama Canal are affecting Asian cargo flows to the East and Gulf coasts. If these issues persist and there is a “normal” peak season volume upswing in the months ahead, importers could face higher-than-normal complications.

May imports rise versus April

U.S. ports handled 2,097,313 twenty-foot equivalent units of imports in May, according to Descartes. That’s down 20% year on year, but 2022 numbers were heavily skewed by a one-off event — the pandemic-induced shipping boom.

chart of US imports
(Chart: Descartes. Data source: Descartes Datamyne)

May’s imports were up 3.8% from April and 0.5% from May 2019, pre-pandemic.

“As with the first four months of 2023, the growth in import volume in May continued to track 2019 volumes,” said Chris Jones, executive vice president of industry and services at Descartes Systems Group.

Imports from China were the biggest gainer in May, up 37,991 TEUs versus April, with imports from Vietnam the second-largest driver, up 20,362 TEUs.

Descartes uses customs data to generate import figures. Another data source, Global Port Tracker, published by the National Retail Federation and Hackett Associates, covers imports to 12 leading U.S. ports using official numbers released by the ports.

Final numbers are not in yet, but Global Port Tracker estimates May volumes will total 1,844,625 TEUs for the ports it covers. That’s up 3.6% month on month and tracking very close to pre-COVID levels: down 0.3% versus May 2019 and up 1.1% versus May 2018.

The NRF and Port Tracker predict this year’s peak season will follow a typical pattern and be up slightly versus the pre-COVID years. Its latest projection is for June-October volumes to be 4% higher than the same period in 2019 and 3% higher versus 2018.

chart of US imports
(Chart: FreightWaves based on data from NRF)

More container ships headed to US

 “We’ve got 52 ships on the way now from Asia to Los Angeles and Long Beach with a total capacity of 470,000 TEUs,” Port of Los Angeles Executive Director Gene Seroka said during a board meeting Wednesday.

“This is the highest number I can recall since last August, when cargo started to be purposefully moved to the East and Gulf Coast ports [due to concerns over labor disruptions]. So, we’re starting to see a little bit of an uptick, with more cargo coming.

“Our estimate is that our traditional peak season, which caters to Christmas and Hanukkah and other holiday celebrations, will probably be in September and October this year — and will not be super-long or super-elevated,” said Seroka. 

He expects elevated inventory levels to keep peak season subdued, but foresees “a more traditional cadence” akin to pre-pandemic import timing.

Seroka’s comments on the rising number of inbound vessels echoed a report by Alphaliner on Tuesday. “Outbound trans-Pacific cargo movements spiked to their highest level in six months in May, giving some optimism to carriers,” it said.

Alphaliner cited statistics from the Japan Maritime Centre showing that monthly outbound trans-Pacific volumes exceeded 1.5 million TEUs for the first time since October.

Labor disruptions impacting ship schedules

Rising seasonal volumes could come head-to-head with labor disruptions on the West Coast and water-level limits at the Panama Canal.

Dockworker slowdowns are starting to affect the schedules of ships calling at West Coast ports. Queues remain very small compared to COVID-era levels, but they’re growing. Ship-location data from MarineTraffic showed eight container ships waiting offshore of U.S. West Coast ports as of mid-day Thursday.

“I hope the [labor contract] negotiations end soon, because it’s in nobody’s best interest to have unrest on that front as we move into peak season,” said Rolf Habben Jansen, CEO of ocean carrier Hapag-Lloyd, during a presentation Monday.

According to Jonathan Gold, vice president for supply chain at the NRF, “Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year, bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports.

“If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways,” said Gold.

Canal water restrictions to increase

The problem with taking cargo to the East Coast and Gulf Coast gateways is that Panama is experiencing its worst drought since 1950, restricting ships drafts in the canal. The Panama Canal Authority (ACP) warned Monday that water levels could continue to fall and “unfortunately, current estimates indicate that the economic impact is unavoidable.”

The maximum draft for the larger Neopanamax locks has been reduced to 44.5 feet, with expectations for a reduction to 43 feet by August. “A limited number of ships have had to lower their drafts to comply,” said the ACP.

According to Habben Jansen, the current situation in the Panama Canal is worse than in previous droughts. “At the moment, we are not diverting ships,” he said. “But the effect is that you can simply load less boxes on the same ships, which is of course not a good thing.”

Lars Jensen, CEO of consultancy Vespucci Maritime, said in an online post, “Shippers using the Asia-U.S. East Coast service through the Panama Canal might want to consider contingency plans for services routed through the Suez and/or plan for further surcharges.”

Trans-Pacific spot rates rising

Trans-Pacific spot rates could rise more than they otherwise would have if peak season volumes coincide with labor and canal disruptions.

Spot rates are still at loss-making levels, but they have recently increased. A June 1 general rate increase is one driver, but labor and canal disruptions may also be playing a role.

The Drewry World Container Index (WCI) spot assessment for Shanghai to Los Angeles rose 6% in the week ending Thursday versus the prior week, to $1,896 per forty-foot equivalent units, the highest level since the week ending March 23. The WCI Shanghai-New York index rose 5% week on week to $2,975 per FEU, its highest level since the week ending Feb. 16. Drewry said it expects rates to continue to rise over the next few weeks.

The Freightos Baltic Daily Index (FBX) China-West Coast spot assessment was $1,557 per FEU on Thursday, up 20% over the past week. The FBX China-East Coast index was at $2,652 per FEU, up 15% week on week.

chart of container shipping spot rates
Spot rate in USD per FEU. Blue line: China-West Coast. Green line: China-East Coast. (Chart: FreightWaves SONAR)

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West Coast dockworkers making $200K demand higher pay

Dockworkers who keep West Coast cargo flowing are highly paid. Their bid for even higher pay is starting to affect the cargo flow.

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West Coast container port operations are being disrupted by a dispute over the size of dockworkers’ next pay raise, with disruptions now starting to affect ship operations.

“We got a rash of vessel movements canceled overnight,” said Kip Louttit, executive director of the Marine Exchange of Southern California, on Wednesday.

Departures of six ships berthed in Los Angeles or Long Beach have been delayed: the Cosco Portugal, Cosco Oceania, Cosco Shipping Rose, CMA CGM Amerigo Vespucci, CSCL Yellow Sea and YM Unicorn. Arrivals of four ships to the ports are delayed: the Aitolikos, Cosco Denmark, Cosco Netherlands and Cosco Taicang. Yet another ship, the MSC Jeongmin, had its arrival in Los Angeles delayed Tuesday.

International Longshore and Warehouse Union (ILWU) dockworkers handle cargo across the West Coast, including at the major container gateways of Los Angeles, Long Beach and Oakland in California, and Seattle and Tacoma in Washington.

Union pushes for higher wages

The ILWU is demanding wages and benefits in the next five-year contract that reflect dockworkers’ role in the COVID-era import boom, a one-off event that ended last year. The prior contract expired July 1, 2022.

The union cited the decrease in member wages and benefits as a share of the revenues of terminal employers and ocean carriers represented by the Pacific Maritime Association (PMA).

ILWU Local 13 said that “ocean carriers and terminal operators have thumbed their noses at the work force’s basic requests” after effectively treating dockworkers’ lives as “expendable in the name of profit” during the pandemic.

If the narrative is “greedy employers take advantage of American workers,” it’s only fair to take a closer look at what West Coast dockworkers currently earn — the starting point for pay and benefits they’re seeking to boost in the new contract.

Detailed compensation data is published annually by the PMA. It shows that West Coast dockworkers are already some of the highest-paid workers in the country.

ILWU wages vs. other professions

Full-time registered longshore workers earned an average of $197,514 in 2022, not including benefits, according to the PMA. Clerks earned an average of $220,042 and foremen and walking bosses averaged $306,291. (Full time is defined as working 2,000 hours or more per year, or 38.4 hours per week.)

The PMA also paid $100,534 per ILWU registrant in benefits costs. Benefits include full insurance coverage, a 401(k) and a pension with a maximum yearly retirement benefit of $95,460.

The U.S. Bureau of Labor Statistics compiles data on average annual wages by profession. West Coast dockworkers rank toward the top when compared to the government stats.

Full-time dock foremen earned 24% more than the average CEO’s base salary in 2022 and 20% more than neurologists. ILWU clerks earned just $5,600 per year less than airline pilots. Full-time dockworkers came in 21% higher than lawyers and 9% above dentists.

Average earnings in 2022 for all full-time ILWU registrants — $211,000 — were 3.4 times higher than the average wage for all professions calculated by the Bureau of Labor.

(Chart: FreightWaves. U.S. salaries as of May 2022 from U.S. Bureau of Labor Statistics. ILWU earnings data from PMA 2022 annual report.)

The caveat on the PMA data is that a portion of union registrants are under the full-time threshold. Of longshore workers, 42% worked less than 2,000 hours in 2022. The bulk of longshore workers (including non-full-time workers) earned in the $100,000-$200,000 range.

Among clerks, 19% worked less than 2,000 hours, with overall earnings bunched in the $150,000-$225,000 range. Of walking bosses and foremen, only 10% did not meet the full-time definition. Salaries were grouped in the $250,000-$325,000 range. Some foremen earned over $400,000 and a few topped a half-million.

chart of dockworkers salaries
(Chart: PMA 2022 annual report)

How ILWU earnings are calculated

The average 2022 ILWU registrant base rate — $46.23 per hour — doesn’t sound that steep for skilled labor. But as the PMA explained in its annual report, worker earnings also include an additional component based on skill level. Skill bonuses range from $2.40 to $5.80 per hour and were added in 80.7% of hours paid last year.

Pay also increases for the second shift (eight hours starting 6 p.m.) and third shift (five hours starting at 2:30 a.m.) to $61 to $83 per hour. Work on these shifts accounted for 38.5% of total hours paid last year.

Then there is overtime, which accounted for 36.4% of hours paid in 2022. Overtime pay rates range from $69 to $93 per hour. Altogether, the PMA said the effects of skills bonuses, work shifts and overtime brought the effective average rate for all hours paid to $64.10.

COVID was yet another key factor. The ILWU labor force was essential to keeping goods flowing during the pandemic, despite risks to the dockworkers’ health. At least 43 union members died of COVID, according to the ILWU.

The change in consumer behavior during the pandemic led to a flood of cargo into West Coast ports that continued through the first half of last year, hiking both straight hours (non-overtime) and overtime.

The PMA paid ILWU registrants at all U.S. West Coast ports total wages of $2.31 billion in 2022, up $371 million or 19% versus 2019, pre-pandemic. The effective hourly rate rose 7% over the three-year period. Straight time was 22,895,230 hours in 2022, up 8% from 2019. Overtime came in at 13,084,540 hours, up 16%.

Click for more articles by Greg Miller 

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