Ag shippers suggest ways to improve container flow through the country’s marine terminals.
Members of the Agriculture Transportation Coalition expressed frustration over port congestion and suggested ways that cargo flow might be improved during their annual meeting in San Francisco late June.
Nina Solari, vice president of quality and food safety at Avanti Nut Co., received a standing ovation from her fellow AgTC members during a speech that voiced many of the frustrations shippers feel about port congestion, including the slowdowns last fall and winter during contract negotiations between the International Longshore and Warehouse Union and employers represented by the Pacific Maritime Association.
Solari proposed that the dockworkers contract negotiations be brought under the Railway Labor Act, as opposed to the National Labor Relations Act. Supporters of that change say disruption tactics used by the ILWU during contract negotiations this past fall and winter would not be permitted under the RLA.
While Avanti is a small company, about 80 percent of its sales are overseas and it ships to countries such as Japan, Korea, Taiwan, Australia and Germany.
“Due to the lack of work being conducted at the Port of Oakland, we incurred extra shipping costs, due to rerouting of cargo to the East Coast, rail charges, chassis charges, per diem charges, and parking fees,” Solari said.
While these amounted to just $15,000, she said, “We are not a big box store. We are a family business, and that was a significant hit to us.”
Solari said many businesses lost a lot more money, noting that in central Washington alone, $95 million in apples were dumped in the fields because they were rotting in containers waiting to be exported.
Highlighting that the average full-time longshoreman working 2,000 hours a year makes a guaranteed annual salary of $147,000 with full health benefits and a paid pension, Solari added, “I’m not against people making a good living, as long as it is earned, not given.”
She complained the ILWU workers do not maintain productivity or production goals and were given full pay during port shutdowns, resulting from the contentious labor negotiations.
“There have been numerous accounts where the union has violated their contract, without any consequences. How does that work? At what point do the longshoremen suffer consequences for violating their contract?” she asked.
Michelle Staples, logistics director at CellMark, said congestion issues in the past year “can be encapsulated in one word: operations.”
“Port operations, even without a slowdown, are lacking,” she said. “We are spending a lot more money, a lot more costs on inland transportation than we ever have and it is out of our control because of the problems happening at the ports.
“There seems to be an inherent lack of cooperation with the parties involved at the terminals, whether it be the port authorities, terminal operators and carriers — be they ocean carriers, railroads and truckers,” Staples added.
Staples was excited about the collaboration between the Port of Seattle and Port of Tacoma in forming their Northwest Seaport Alliance, but said that kind of cooperation should not be limited to the terminals and extend outside the gates, as well.
“This is a cost that is completely outside our control. We don’t know month to month what we are going to be paying in transportation. The slowdown is over, but obviously we are going to continue to have labor problems here and there, but that does not mean we should not fix everything we can,” she said.
In a speech to the AgTC members, Duncan McGrath, a global container freight lead at Cargill, made a plea for simplification and clarification of terms such as “free time” and “demurrage” in shipping contracts.
McGrath said some carriers use the term “demurrage” for charges incurred when containers take up space at a port, while others use the term to refer to charges used when a container is in use.
Customers may ask for demurrage free time and “we don’t know if they are asking for port storage free time or if they are asking for container storage free time,” he said.
“If they are asking for port storage free time, we don’t know if the steamship company controls that or the port controls that and it seems to vary all over the world. And even in the same location, it seems to vary by terminal or carrier.”
With equipment, some carriers begin the free time clock when cargo is discharged from a ship, while others start the clock when the container is gated out full.
McGrath noted that free time is really “prepaid usage” of equipment, and that carriers would like to cycle equipment through their networks as frequently as possible. While some customers need 15 days of free time for equipment — loading or discharging cargo may take longer because of a national holiday, for example — while others only need three or four days.
He said carriers have told his company that the Federal Maritime Commission requires free time and demurrage conditions to be specified in the contract, so he negotiates contracts for a “worst possible scenario” or about 15 days of free time, even if only three to five days are needed typically. McGrath went on to say he would like clarification of this requirement by the FMC.
“We are paying for free time we do not necessarily use because we are told by carriers — some carriers — that it has to be in the contract ahead of time,” he said.
“My proposal would be to have these rules and start-and-stop times aligned globally,” McGrath added, and he suggested this might be done through an industry group such as the World Shipping Council.
McGrath also mentioned in an aside that his company is switching a lot of carrier haulage to merchant haulage in its trucking operations.
Marlon Jones, manager of international transportation at International Paper, said congestion at West Coast ports cost his company millions of dollars.
“We diverted quite a bit of cargo just to keep our customers in supply,” he said.
He noted International Paper had 100 percent of the business of some overseas customers. During the port disruption, foreign competitors suggested those customers diversify their sourcing.
Jones said his company’s competitors “played this West Coast fiasco to their hand and we lost quite a bit of business. A lot of this business will never come back.”
“Everyone deserves to make a profit. Everyone deserves to have good wages and benefits, but you cannot disrupt the import and export balance in North America. It just kills us,” he added.
Jones said the contract dockworker negotiation process needs to be simplified and contracts should be negotiated in three to six months.
“We’ve got to take care of ourselves. If we don’t 2018 and 2019 is going to be catastrophic,” he said, referring to the fact that the contract between the International Longshoremen’s Association and U.S. Maritime Alliance expires 2018 and the ILWU-PMA contract expires the following year.
This article was published in the August 2015 issue of American Shipper.
