West Coast ag exporters told to expect few port productivity gains out of labor contract


Bill Mongelluzzo, June 27, 2015, JOC.com

U.S. agriculture shouldn’t expect dramatic improvements in cargo-handling productivity to come out of the new West Coast longshore contract, said Ed DeNike, chief operating officer at SSA Marine, said the contract itself will not deliver productivity.


A closer working relationship between employers and the International Longshore and Warehouse Union is needed, told attendees of the annual meeting of the Agriculture Transportation Coalition this week.


“I’ve been in this industry for 50 years and I’ve never seen a situation like we had this year,” DeNike said. “There were no critical issues,” he said, “just a bunch of little things.”


DeNike expressed a sentiment held by management, labor and especially cargo interests about the tortuous contract negotiations this past year between the ILWU and the Pacific Maritime Association. The negotiations finally produced a tentative contract agreement on Feb. 20, but only after four months of work slowdowns that resulted in the worst port congestion since the 2002 contract talks. Shippers of low-margin commodities like agricultural and forest products, which are oftentimes dependent upon regional ports to provide competitive transportation costs, suffered more than most importers and exporters.


The agricultural shippers who collectively lost millions of dollars of sales and incurred additional millions of dollars in extra costs when they diverted shipments to East and Gulf Coast and Canadian ports had hoped that the new five-year contract will result in work rule changes that will lead to improved productivity at West Coast ports. There were no such changes.


Negotiators spent more than two months haggling over health insurance and other benefits, “but that is normal,” DeNike said. Hammering out a new arbitration system that should prevent day-to-day waterfront disputes from dragging on and disrupting cargo-handling also took some time to work out.


But as far as any innovative or long-term improvements in the contract, DeNike said, “I don’t see anything that will make it easier to move cargo.”  He quickly added, though, that the previous contracts in 2002 and 2008 give employers all the flexibility they need to implement technology and automation in order to continue improving cargo handling productivity at West Coast ports.


Shippers of agricultural and forest products depend upon smoothly-operating ports in order to keep transportation costs as low as possible as they attempt to compete against exporters of the same commodities in other countries. They want marine terminals to remain open consistently, with no gate closures for lunches and coffee breaks. They would like to see an ILWU contract with built-in rewards for higher productivity. They would like a prohibition of the costly slow-downs that contributed to the port congestion this past year.


In short, said Duncan McGrath, global container freight manager at Cargill, so many changes are needed in West Coast waterfront work rules and practices that exporters would like to see the ILWU and PMA tear up the existing contract and and start over. “A blank sheet,” he said.


“Don’t tear up the program and start over,” said Bobby Olvera, president of ILWU Local 13 in Southern California, the largest local on the coast. Olvera offered his own agenda for efficiency, a program that calls upon cargo interests and employers to do their part.


Terminal productivity will improve when importers and exporters stop using “the most expensive real estate in the nation” as a storage yard, he said. Rather than using up all of their free time, importers should remove their containers as soon as they are unloaded from the vessel in order to open up terminal space so more containers can be unloaded from the mega-ships that call today at West Coast ports, he said.


Employers should operate flex gates that open early and stay open late — which the contract allows — and run as many second shifts and night gates as are needed at each port to keep the cargo moving, Olvera added. Most of all, the PMA must hire more longshoremen to replace thousands of casuals who left the industry during and after the economic recession, he said. In that respect, he pointed out that the PMA agreed to hire and train 250 more crane operators in Southern California over the next two years.


DeNike said he has no problem with the skills of West Coast longshoremen.”These guys can do a good job when they want to do it,” he said. “Most of them want to do a good job. We need a culture of working together to motivate them on a daily basis,” he said.


“So, how much more motivation do they need?” said Tammy Rossi, manager of operations and logistics at Blue Diamond Growers, who quoted PMA figures stating that the longshoremen who worked at least 2,000 hours last year earned on average $147,000. That number is usually disputed by longshoremen and some employers who say it is inflated by those longshoremen who work long hours at higher-skilled jobs with large skill differential bonuses.


The AgTC membership roundly criticized the ILWU for engaging in work slowdowns that started in early November and ended after the tentative contract was reached on Feb.20. Longshoremen frequently deny that they engaged in work slowdowns. “It wasn’t a slowdown,” said Rich Dines, an ILWU marine clerk who is also vice president of the Port of Long Beach Board of Harbor Commissioners.


The PMA documented 30-40 percent drops in crane productivity in Oakland, Seattle and Tacoma from Nov. 1 to  Feb. 20. In Los Angeles-Long Beach, the PMA stated, the ILWU slashed the number of skilled crane operators they dispatched each day from the hall to 35 from the normal 110. The ILWU said that for safety reasons the union stopped dispatching “qualified” crane operators who had worked the position before but were not “certified” because they had no formal training. The union returned to dispatching those untrained crane operators after Feb. 20.


Olvera emphasized that the PMA contributed to the congestion beginning in late 2014 when terminal operators systematically reduced the gangs that were ordered to work big ships from six to four to three to two, and then employers ended night vessel work, which added further to the congestion problem.


AgTC members responded that they could care less who was right and who was wrong. If they are going to remain loyal to West Coast ports, they can not tolerate future work interruptions and congestion, they said.


Dines, speaking as a Long Beach harbor commissioner, said terminal operators that do not want to do what’s necessary to improve productivity in today’s highly-competitive port industry in which East Coast and Canadian ports are attempting to take Long Beach’s business should be replaced. “I have five carriers that want to come to the Port of Long Beach,” he said.


The ILWU, working with management, is implementing creative programs to improve productivity, such as free-flowing cargo from the vessel and immediately out the gate for pre-vetted cargo owners and truckers. Dines encouraged the ag shippers to remain loyal to Long Beach. “I want your cargo,” he told the AgTC conference.

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