Issue 349, May 17, 2002
The opening of official negotiations between the International Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) on May 13th has brought renewed focus and attention to the possibility of a strike as of July 1, 2002 - an occurrence which would shut down all ports on the West Coast of the United States for all inbound and outbound shipping. While there has not been a full-fledged longshoremen strike on the West Coast since 1972, the negotiation of the new three-year contract this time around is expected to be a very difficult one. The employers (PMA) want the ability to introduce new technology and automation that would bring West Coast ports up to the productivity standards that are presently being met in such world-class ports as Hong Kong and Singapore. In addition, they seek to change long-standing work rules that they say have reduced productivity and driven up costs of operation. The ILWU wants each productivity measure to be specifically defined, enabling them to negotiate concessions that would guarantee them new work opportunities and protect jobs.

The West Coast Waterfront Coalition, an organization of importers and exporters, including many of the largest retailers in the United States, supports a contract that improves the efficiency of the container terminals, and has pushed for federal mediators to be involved from the beginning. The ILWU has invited Teamsters Union President, James Hoffa, to attend the negotiations as a sign of support. Thus, the scene is set for a prolonged and complicated bargaining process, one that most likely will go right down to the final hour on June 30th. At the same time, the US Government is keeping a watchful eye on things, and is undoubtedly making preparations for what their role would be in the event of a possible strike or lockout on July 1.

Danzas AEI Intercontinental has been in regular contact with the ocean carriers to understand their contingency plans if there is indeed a strike. As we've been told, all carriers are in agreement that there is no one alternative that will avoid shipping problems if a strike or lockout occurs (like diverting vessels to other ports). Losing the use of the West Coast ports simply will create a situation where there are more containers on the water than can be unloaded. The carriers say they will continue to run their usual services, ensuring that no vessels are anywhere near West Coast ports as of June 30. If there is a strike, they will most likely wait several days to see what the settlement possibilities are before possibly diverting vessels to other ports. However, that possibility is greatly limited by the probability that longshoremen in other non-ILWU ports such as Vancouver, Houston, and East Coast ports will refuse to handle such diverted cargo. In addition, these other ports generally lack the capacity to handle anywhere near the volume of containers coming in on the large vessels used in the Transpacific trade.

We at Danzas AEI Intercontinental will continue to keep all interested parties advised of developments and options as things progress. Your account representative will remain in touch with you to answer your questions and discuss viable alternatives to this situation. We will also continue to keep you updated through The Danzas AEI Resource newsletter.

Sincerely,

Gary Osterbach
Director, Ocean Services, Western Division
Danzas AEI Intercontinental
email: gary.osterbach@us.danzas.com

Please note that due to the complex nature of the subject matter, DHL Danzas Air & Ocean cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with DHL Danzas Air & Ocean.