On the heels of what the PMA termed as a ‘best offer’ to which the ILWU responded saying the sides are ‘extremely close’ and urging a continuation in negotiations, the PMA suspended vessel loading and unloading operations this past weekend.

“In light of ongoing union slowdowns up and down the coast which have brought the ports almost to a standstill, PMA member companies finally have concluded that they will no longer continue to pay workers premium pay for diminished productivity. After three months of union slowdowns, it makes no sense to pay extra for less work,” said PMA spokesman Wade Gates. (ILWU members make time and half on weekend shifts.) Further, the PMA made certain to drive home the point that “yard, rail and terminal operations would continue at the discretion of the terminal operators.”

In response, ILWU spokesman Craig Merrilees stated “closing the ports over the weekend is a crazy way to treat customers. The foreign-owned firms behind this move are insulting the businesses who need their containers, and should focus instead on reaching an agreement that is almost done – and could be finished if they focused more on concluding a contract and less on gimmicks and games that hurt the economy.”

Vessel operations and contract negotiations resumed Monday, February 9.

The ILWU’s recent demand to have the right to fire arbitrators that rule against the union threatens to derail West Coast port contract talks. The PMA said the union’s demand “would give the ILWU veto-power over arbitrators’ rights to prevent Union slowdowns, and in so doing would threaten the consistent and reliable movement of cargo through West Coast ports.”

“The same arbitrators who have ruled against the ILWU are the ones being targeted by this latest contract demand,” the PMA said. “The ILWU is essentially seeking the right to fire judges who rule against them,” said PMA spokesman Wade Gates. “The waterfront arbitration system is an essential check-and-balance against illegal labor actions. It would be reckless to allow a single party to change the rules as the union desires.”

Note: While not presently included in ocean freight rates, a carrier congestion surcharge of $800.00/ 20’DV, $1,000.00/ 40’DV, $1,125.00/ 40’HC per container could potentially be instituted. Whether this surcharge will be applied or waived cannot be determined in advance as it’s tied to the current port congestion situation associated with among other causes the potential USWC strike.

Faced with huge ‘per diem’ and ‘demurrage’ charges for containers and chassis they have been unable to either pickup or return due to the congestion crunch in the ports of Los Angeles and Long Beach, more than 70 west coast truckers have declared ‘force majeure’ reports the Harbor Trucking Association (HTA). Inland carriers have been charged hundreds of thousands of dollars in fees which are considered in violation of California State Law SB 45. For more information on SB 45, Click Here.

Weston LaBar, executive director of the HTA, advises “the biggest reason for the per diem is that carriers are simply not able to return marine equipment to the port. Likewise, demurrage fees are incurred on containers which are often not accessible for pickup until after the free time for pickup has expired as the container was in an area of the marine terminal yard that was not open for whatever reason.”

Sadly, the reality is that “those companies who can no longer afford to pay the mounting invoices are being locked out of doing business with the ports causing further distress” to an already critical situation, HTA said. “A lot of smaller companies are on the brink of going out of business because they don’t have the cash flow to support the per diem and demurrage charges” said LeBar.

HTA said the trucking companies are invoking a declaration of force majeure as defined under the Uniform Intermodal Interchange Agreement (UIIA), the standard agreement used. The UIIA provides this definition in the agreement, “Force Majeure: In the event the motor carrier is unable to interchange equipment to provider within the free time as specified in provider’s addendum, or provider’s applicable tariff, as a result of acts of God, war, insurrections, strikes, fire, flood or any like causes beyond the motor carrier’s control, the motor carrier shall be exempted from the per diem charges to the extent of, and for the duration of, the condition that prevented the redelivery of the equipment.”

Citing a forecast that calls for “significant increases in shoreside and inland rail, truck and equipment management costs during 2015,” Transpacific Stabilization Agreement (TSA) member carriers are planning back-to-back freight rate increases of $600 per 40-foot container (FEU) next week and in March, and a possible additional rate hike in April.

The first rate increase would go into effect Feb. 9, 2015. TSA indicated it will “follow with a second $600 per FEU increase on March 9, with an April increase likely to follow, in an amount to be determined and announced later.”

As TSA member carriers consisting of APL, China Shipping, CMA CGM, COSCO, Evergreen, Hanjin, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, Maersk, MSC, NYK, OOCL, Yang Ming and ZIM, carry nearly all containerized cargo from Asia to the United States, avoiding the increases will be virtually impossible.

The port ended the year with 490,526 total TEU’s moved through the ports’ container terminal representing an 8.8% increase over 2013 year end totals. Strong chemical and agricultural export markets contributed to the record breaking achievement.

New services in 2015 in the form of CMA CGM’s European service and a full year of Chiquita business could translate into another year of record-breaking totals. Not resting on their laurels, The Port of New Orleans has numerous container terminal expansion efforts underway aiming to add an additional 200,000 TEU’s of capacity to the container terminal bringing the total capacity to 840,000 TEU’s upon completion slated for February 2016.