URGENT MUST READ INFORMATION USWC Labour Update

Dear All,

PLEASE READ THIS IF YOU SHIP TO OR FROM THE USA

URGENT – LATE BREAKING INFORMATON

The USWC (United States West Coast) congestion/labour contract dispute continues to worsen and is now coming to a head on collision.

The PMA (Pacific Maritime Association – The USWC ports) have met 90% of the union demands as you can read on the attachment.

The ILWU (International Longshoreman and Warehouse Union) leadership (about 100 people) flatly turned down the latest contract offer.

Yesterday the PMA released the attached press release and announced if the ILWU did not sign the contract by Sunday the PMA would close the ports along the USWC and lock out the ILWU workers without pay.

The last Thursday of every month is a “stop work” meeting for the ILWU where they discuss various union issues.

The next meeting is taking place in a few hours

Those are the facts, the following is an educated guess of the possibilities of what may transpire based on information from well informed people on both sides.

The PMA’s intention with their press release was to inform the 1000’s of ILWU workers what the latest offer actually includes as the PMA feels that the ILWU leadership may have not been telling their members the entire story.
By providing them the details of the offer it allows each ILWU member to have the details of the latest contract offer before the meeting taking place in a few hours.

If the ILWU members pressure their leadership to take the deal a contract will be signed within days and the entire ordeal will be resolved.

If the ILWU remains resolved to not accept the current offer it is highly likely the PMA will close all of the ports on the USWC shutting the union out without pay.

If that happens;
1. The ILWU will lobby President Obama to enact the Taft-Hartley Act ( http://en.wikipedia.org/wiki/Labor_Management_Relations_Act_of_1947) and force the ports to re-open.
2. The PMA will lobby President Obama to refrain from enacting Taft-Hartley and appeal to The President to apply pressure to the ILWU to negotiate and agree upon a compromise.

President Obama’s support base is labour and as such their platform is sympathetic to their cause.
The USWC congestion is costing the US economy billions of dollars so there is extreme pressure on The President’s office to resolve things before they get even worse.
Until now the Federal appointed mediators have been without power to bring about a resolution because as long as the ILWU is not striking (Wildcat strikes are immune to this, for the government to have the power to act the entire ILWU needs to strike) and the PMA is not shutting the ILWU out (Shutting down nightshift is immune to this, for the government to have the power to act the PMA needs to lock out the ILWU entirely), the government cannot intervene and force something to happen.

We are going to see intense negotiations and extreme pressure applied to both sides in the forthcoming week.
For us it means more delays, 6 times the amount of work to move the same shipment, and a lot of frustration.

DGX is an asset based company owning its own warehouses, trucks, and chassis. This places us in the unique position to be able to move cargo when others cannot and ensure your cargo moves with the minimum delay possible. In many cases we are advancing cargo on earlier ships to lessen the impact of the situation upon your supply chain.
DGX will continue to diligently monitor the situation and use all of the resources we have at our disposal to protect your interests.
This includes obtaining space when there is none, getting our containers loaded when others are rolled, negotiating with the lines for extended free time, avoiding detention charges, and moving cargo in and out of the ports avoiding demurrage charges.
If the ship is not in port or the ports are closed of course DGX suffer the same delays that everyone else does.

To surmise the previous notices sent out I have compiled the below summary for your references.
In chronological order
1. PIL removes its 10 ships from servicing the USA to AU/NZ trade and joins the VSA (Vessel Sharing Agreement between USL, PIL, Hamburg Sud, Hapag Lloyd, and MSC)
2. Shipping Lines divest themselves out of supplying chassis
a. Independent chassis companies now lease chassis to those seeking to pick up containers at the port or rail head.
3. On July 1 the ILWU contract expires without an agreement between the ILWU and PMA
a. After several months of working without a contract the ILWU issues an announcement to its members to “work safely”. Subsequently a reduction in efficiency of about 25% occurs.
b. In response to reduced efficiencies the PMA cancels nightshift. This cuts the ILWU members wages in half and also forces vessels to only work during the day and cargo to be picked up and delivered only during the day. This severely worsens the delays on the USWC.
c. In response to this the ILWU begin “wildcat striking” shutting down 1 terminal in 1 port for a short period of time causing havoc in the ports.
4. The shipping Lines invoke a congestion surcharge of $1000/FEU
5. The FMC overrule the charge and have the lines withdraw it.
6. The G6 Alliance upgrades its fleet to incorporate 16,000 teu ships
a. The USWC ports were not prepared for such an immediate increase in throughput in a short period of time.
7. Trapac terminal in Los Angeles (The G6 contracted terminal) becomes overwhelmed with containers
a. Trapac is an off dock rail terminal, which means the cranes need to load its containers form the ship on to a truck which then move the containers to the rail head.
b. Because of the vessels size and the fact that most of the containers arriving are destined for the Midwest (and most of the containers being exported originate in the Midwest) the containers quickly accumulate.
c. 1000’s of chassis need to be quickly employed along with 1000’s of truckers on a daily basis to ensure cargo is moved to and from the terminal to and from the rial as fast as possible
d. This creates a shortage of chassis and available truckers in the Southern California basin
8. The Rail head becomes overwhelmed with containers
a. As mentioned above 1000’s of chassis and 1000’s of truckers are employed to alleviate this backlog.
9. Trapac (The VSA appointed terminal) severs their contract and gives the VSA 5 days’ notice to leave and find another terminal.
10. The VSA moves to Pier A
a. The contract was a take it or leave it contract as the terminal was already busy and they knew the VSA needed a berth.
b. As such the terms are unfavourable to the VSA and part of those costs are being passed on in the form of a OTM (Origin Terminal Move) or THC (Terminal Handling Charge) of $300/FEU
c. Up to 3 vessels from the VSA are in the LA port awaiting a berth and/or being serviced.
11. Delays become so bad in northern California that The port of Oakland runs out of available anchorage leaving mega-vessels literally drifting around waiting for a place to anchor.
12. In 2014 after a 6 year legal battle the California Air Resources Board have won their right to impose restrictions upon the sulphur content being used within 20 nautical miles of California. This mandated that higher quality fuel be used reducing the sulphur content from 1.0% ten times lower to 0.1%
13. In January of 2015 this was extended into legislation to incorporate the entire US and Canada west coast for a region 200 nautical miles off of their coast. This increases the cost of fuel and reduces the speed of the vessels. Personally I support this as it also dramatically reduces the pollution caused by maritime shipping and protects our environment.

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