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Container terminal operators warn of port shutdown

Container terminal operators are warning that longshoremen are bringing West Coast ports to the point of gridlock without actually threatening to lock out their union from facilities.
Mateusz Perkowski

Capital Press

Published on February 4, 2015 4:02PM

Last changed on February 5, 2015 9:58AM

Cargo containers are shown being loaded on ships at the Port of Portland in this file photo. Container terminal operators claim West Coast ports are on the brink of shutting down but have stopped short of threatening to lock out the longshoremen’s union.

Mateusz Perkowski/Capital Press

Cargo containers are shown being loaded on ships at the Port of Portland in this file photo. Container terminal operators claim West Coast ports are on the brink of shutting down but have stopped short of threatening to lock out the longshoremen’s union.

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Container terminal operators claim West Coast ports are on the brink of shutting down but have stopped short of threatening to lock out the longshoremen’s union.

“At some point this will collapse of its own weight,” said Jim McKenna, CEO of the Pacific Maritime Association, which represents terminal operators. “This can’t keep going forever.”

McKenna claimed cargo congestion caused by the longshoremen is reaching a level where PMA’s “hands will be tied” and it can no longer pay them while ports are gridlocked.

However, he did not say his organization is planning an imminent lockout.

“The system can only take so much. We’re getting to a point anything is possible,” he said.

The PMA is also going “all in” with its most recent labor contract offer to the International Longshore and Warehouse Union, which has been working without an agreement since July, McKenna said.

“The PMA has concluded the latest offer is as far as we can go at this point,” McKenna said.

He would not go so far as to claim the negotiations are at an impasse, which would allow the employers to unilaterally implement its final contract offer on the union.

Capital Press was unable to reach ILWU for a response as of press time.

The PMA’s warnings are “partly posturing and partly substantive,” said Michael LeRoy, a labor law professor at the University of Illinois who was involved in a past dispute between ILWU and PMA.

While McKenna did not draw a line in the sand, his statements may be an indication that container terminal operators want Congress to put more pressure on ILWU or that the Obama administration should plan to intervene in a looming lockout.

“I think it’s more than just posturing. I think they’re inviting the government to get involved in this dispute,” LeRoy said. “I prefer to call it signaling they’ve reached a higher level of concern and frustration.”

If the PMA were to commit to unilaterally implementing a contract, that would amount to provoking the union to take action or comply with its demands, said Jim Tessier, a labor relations consultant and former PMA employee.

“That’s the invitation to a strike, but you’re not the one doing the actual damage,” he said.

Any result that would further disrupt shipping through West Coast ports is of great concern to agricultural exporters, who have contended with port congestion for months.

If a contract were implemented, the ILWU could reject it and go on strike or continue working under the imposed terms, said Henry Drummonds, a labor law professor at Lewis & Clark Law School.

Even if longshoremen didn’t strike, the container terminals could still lock them out due to allegations of misconduct, he said.

In 2013, for example, two Northwest grain handlers locked out longshoremen after claiming sabotage and work slowdowns.

“There are various rationales for a lockout,” said Drummonds.

Unlike the standoff between ILWU and the grain handlers, however, the container terminals would not have the option of keeping their facilities operating in the event of a lockout, said Tessier.

Grain facilities require relatively few workers who were replaced by managers during the lockout.

West Coast container terminals employ more than 13,000 longshoremen — an impossible number of people to replace quickly, Tessier said.

“If they lock these guys out, nothing will happen,” he said.

While recent port congestion has been disruptive, a shutdown would cost the U.S. economy $700 million to $2 billion a day, depending on its duration, according to PMA.

The association’s final contract offer comes shortly after it appeared the parties were making progress in their negotiations.

A key point of contention was recently resolved between the longshoremen’s union and terminal operators, which led to speculation that a new overall labor contract was imminent.

PMA said it had struck a tentative deal with ILWU over the management of truck chassis, which are wheeled platforms used to move cargo containers.

A dispute over chassis erupted when the terminals sold the equipment to other firms, which then performed maintenance and repair work traditionally done by longshoremen.

The chassis issue was a major controversy in talks over the new contract after a previous agreement expired in 2014. In recent months, terminal operators have blamed the union for slowing down shipping as a negotiating tactic.

Agricultural exporters remained nervous about the instability at West Coast ports despite this apparent progress, as congestion has delayed shipments of many farm goods and threatened to ruin the overseas reputation of U.S. suppliers.

“We need a good contract, not just any contract,” said Peter Friedmann, the group’s executive director. “Of course, we’re apprehensive.”

Even if the parties were close to a comprehensive deal, agricultural exporters still have reasons to remain wary, Friedmann said.

Apart from concerns about the contract duration, agricultural shippers hope the deal will increase efficiency and save costs at West Coast ports to regain the confidence of foreign importers and exporters, Friedmann said.

“They don’t want to deal with West Coast ports and West Coast labor any more,” he said.

For example, the undisclosed deal over chassis management is only good news if it allows containers to move more smoothly through ports, rather than impeding their flow, said Friedmann.

“It can go either way, and it’s not just a subtle detail,” he said.



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