US West Coast deal (possibly) done, East Coast facing own challenge

After a week of unofficial industrial action disrupting operations, West Coast ports are (mainly) back to normal and, against the odds, a labour contract deal may have been reached, but Panama Canal restrictions are impacting vessels serving East Coast ports, with carriers imposing surcharges.

Unofficial industrial actions by ILWU locals in the Pacific Northwest and Southern California, which lasted a week, were lifted on Monday and ports, including Los Angeles, Oakland, Tacoma, Seattle and Hueneme, have quickly returned to normal operations, with the last of the vessel backlog gone.

After almost 13 months of negotiation and no agreement on key issues, it seemed that some ILWU members ran out of patience and despite the intervention of US Labor Secretary nominee Julie Su trade reports suggested that they were “still flexing their muscles”, with longshore workers randomly targeting terminals by dispatching some, but not enough, key workers.

Despite the recent rancour, press reports suggest that the Pacific Maritime Association and International Longshore and Warehouse Union have reached a tentative agreement on a six-year contract covering workers at 29 West Coast ports, with Ms Su “playing a key role” in reaching an agreement, according to a joint statement.

The tentative deal is subject to ratification by the two parties, who said they would not release any details of the agreement at this time.

It will be interesting to see how they bridged the gap over wages, which had been the most problematic issue, with the ILWU seeking to essentially double the straight-time hourly wage for general longshore workers, while the PMA is understood to have been offering a wage package that was significantly less than that.

Any deal agreed with the ILWU on the West Coast will also serve as a basis for upcoming talks with the International Longshoremen’s Association (ILA) on the East and Gulf coasts and will impact upcoming negotiations with the Office Clerical Union, which represents about 500 workers at 15 marine terminals and ocean carriers in and around Los Angeles-Long Beach.

Panama Canal drought
In a further complication for East Coast bound cargo, water levels in the watercourses that feed into the Panama Canal’s locks are far below normal, due to drought, resulting in draught limits and rising surcharges for container ships traversing the canal.

The Panama Canal Authority (ACP) has steadily reduced draft levels since February, with a new draft limit of 43.5 feet expected to take effect from the 25th June, which means the largest ships must take fewer containers overall or cherry-pick lower-weight containers.

Industry analysts forecast that the new draft regulations could force some container ships to reduce their cargo by 40%, with Hapag-Lloyd introducing a PCC (Panama Canal Charge) of $500 per container from 1st June, on all cargoes loaded on Asia to US East Coast routes via the canal.

If you have any concerns about the issues raised here, we can review your situation, explain your options and, if necessary, consider alternative access ports in Canada, the Gulf, as well as the East and West Coast.

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