Ports walk delicate balance for alliance

Bill Virgin, March 23, 2015, The News Tribune

It’s time to revisit the West Coast port labor dispute and slowdown since in technical terms they’re not even done.


While a tentative settlement was reached Feb. 20, it’s not yet been approved by the International Longshore and Warehouse Union, which appears to have one of the longest contract-ratification processes in American labor.


According to what the ILWU lays out on its website, it’s still got at least a couple of weeks more to play out: “The tentative agreement will first be reviewed by 90 delegates of the Coast Longshore Caucus who are scheduled to meet March 30 to April 3. Caucus delegates will decide whether to recommend the proposal to the rank-and-file. If recommended, the complete agreement will be mailed to members, followed by discussions at local union meetings. The process ends with a secret-ballot election that allows members to ratify or reject the proposal.”


There’s been little indication to date that the contract is in trouble with the rank-and-file. Aside from some reports from shippers of some problems in Oakland, and a long-running dispute in Portland that dates from well before the latest contract confrontation, the West Coast ports appear to be back in full operation, whittling away at the backlog of parked containers and idled ships that accumulated during the negotiations and slowdown.


But it could happen — even with considerable internal and external pressure, rank-and-file Boeing machinists rejected one proposed contract extension that was to have secured the 777X project for Everett, before approving a second version.


A contract rejection for the West Coast ports would thoroughly complicate a situation for Tacoma and Seattle that is rife with complexities, uncertainties, controversies and competitive threats.


The contract dispute itself qualifies on all counts. No matter how fast or completely the backlog is cleared, it will be impossible to clean up the resentment and ill will exhibited by both sides toward one another or questions about when those might boil over again, snarling supply chains all over. Then there’s the matter of whether shipping customers will still be around to see if labor peace endures or, as they try to repair the financial, operational and reputational damage done, they look to options that won’t leave them vulnerable to another outbreak of unpleasantness between the union and the Pacific Maritime Association.


In the meantime, the port commissions are promoting the Seaport Alliance, with a draft of an agreement forecast for the end of the month, then a public review, then a commission vote in late April or early May. After that, Federal Maritime Commission approval could come in June or July. All that will be done against a background of questions about what the ports really do beyond operating as property leasing agencies, given how little control or influence they appeared to have during the dispute.


The port commissions have argued the alliance is necessary for operational efficiencies needed to counter competitive threats from all over. Whether the alliance will be able to accomplish anything of the sort, the ports have been recently handed one more piece of evidence to make their case that the threats are real.


The Port of Prince Rupert, in British Columbia, has announced a plan to increase capacity of its container terminal by 500,000 TEUs (20-foot equivalent units, the standard measure for containers) to more than 1.3 million.


Prince Rupert’s container terminal, which only opened in 2007, moved more than 618,000 TEUs last year, up 15 percent from 2013. How does that compare to the Puget Sound ports? Combined, they handled 3.4 million TEUs in 2014, and volumes have been flat to down since 2010.


A port that is closer in sailing time to Asia, with a straight shot to the Upper Midwest of the U.S. (and by extension, on a Canadian-owned line, to the Mississippi Valley) on a less congested rail line? Yeah, that might be a competitive concern. That additional 500,000 will come out of somebody’s market share. You might make the argument that Vancouver, British Columbia, stands to be competitively threatened as well, except that container volumes there were up 3.1 percent from 2013 to 2014.


Mindful of that, the ports have been looking at diversification of cargos handled, but that course of action, well-advised though it may be, is fraught with peril. Just ask the Seattle port commission, which came up with a plan to generate revenue off an idled facility through a temporary lease to Foss Maritime as a staging and assembly site for components of an LNG plant to be built, interestingly enough, in Prince Rupert, as well a home base for a fleet of vessels doing oil-and-gas exploration work for Shell in Alaska. What it got for that effort was legal action from the enviros and the enmity of Seattle city government.


That’s a lot to be dealing with at one time, but the ports don’t have much choice, if they intend to remain competitively viable. Contract ratification will get at least one item off a crowded agenda — for a while, sort of.

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