Issue 351, June 14, 2002
In issue 349 of The Danzas AEI Resource Newsletter (May 17, 2002), we reported that official negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association had commenced in an effort of averting a strike by the ILWU on July 1, 2002. Since then, the negotiations between the two sides have been sporadic, with the ILWU placing heavy emphasis on issues related to employee benefits. The details of these talks are not easily forthcoming, as both sides have mutually agreed to keep these talks low profile in the media. However, it seems clear that the key issues of technological improvements and job protection have yet to be discussed. Therefore, it is fairly safe to say that as previously predicted, negotiations could continue to the 11th hour, or even beyond the July 1 deadline. The rhetoric from both sides has been rather strong, and at this stage of the game, our best guess is that it is a 50/50 proposition as to whether there will be a work stoppage, either in the form of a strike or lockout. Certainly the possibility of work slowdowns between now and July 1 also exist, although they have not come to pass as of yet.

As for the logistical end of this situation, limited alternatives exist. Those importers who wish to avoid West Coast delays have already begun routing their shipments into East Coast ports instead, at an increased cost and transit time (especially if shipments originate in Asia). Please note that from Asia, space on East Coast all-water services going through the Panama or Suez canals is at a premium. As of this moment, space is also extremely tight on shipments moving all-water into the West Coast (despite any natural assumption that space would open up as July 1 approaches. As of yet, this has not happened.) Waterfront union officials in Canada, the East Coast and Gulf USA, and Great Britain have all announced support for the ILWU, and it is expected that they will refuse to handle ships and cargo diverted from West Coast ports. Carriers have begun making as many arrangements as possible so that their vessels are out of any West Coast port and on the water when July 1 arrives.

Danzas AEI Intercontinental has prepared contingency plans for LCL cargo going into and out of West Coast ports. We will be attempting to move that cargo via the port of Vancouver in the event of an actual strike, subject to the ocean carriers not being boycotted by Canadian longshoremen. We are also prepared to move LCL cargo into New York instead of the West Coast now, upon specific customer instructions. Similarly, for FCL shipments, we will follow whatever instructions that our customers may give to us, knowing that moving cargo naturally destined for the West Coast via an East Coast port will unavoidably increase both cost and transit time. In addition, we offer our air freight expertise for those shipments that simply cannot bear the cost of being delayed due to the possible ILWU strike.

We fully understand the impact such work disruption would have upon your company's supply chain, and will continue to keep you informed during the ongoing negotiation between the West Coast dock workers and their employers. Please feel free to contact your local Danzas AEI Intercontinental representative at any time for further information.

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.