Management cautions ILA on West Coast competition
International Longshoremen’s Association members were told by management’s top negotiator on Tuesday the union faces increased competition for so-called “discretionary cargo” from West Coast ports and railroads.
James A. Capo, chairman and chief executive officer of the United States Maritime Alliance-USMX, the organization that represents stevedores and shipping lines in contract talks with the ILA, suggested West Coast employers and the International Longshore and Warehouse Union management, which represents West Coast longshoremen, would like to recapture business they had handled, but which relocated to East Coast after a lockout shut down western ports for 10 days in 2002.
In facing that competition, the ILA and employers “are in this thing together and it is important we understand that,” said Capo, speaking at the union’s quadrennial convention where top officials will be elected later this week.
He also said the ILA needs to be concerned about the perception of the “shipping community,” which he said is questioning the union’s “reliability,” whether the ILA is “becoming less cooperative and more militant” or a “different type of ILA might be emerging.
“I don’t have the answers, but I would suggest to you that at some point in time together we have to come up with answers, because they are very important to our industry as we move ahead,” he said.
In order to protect the market share of East and Gulf coasts ports, management must have unrestricted use of new technology, he said.
“I know for some of you it’s a bad word, but it is a fact of life, and there is a way to use it that makes sense,” he said. “We have a limited amount of space in terminals and other infrastructure issues that are obstacles to our ability to handle additional cargo. We have to maximize efficiencies.”
He said ILA employers need the ability to use technology to attract capital to build new facilities, pointing to new terminals planned by Global in the Port of New York and New Jersey and Hanjin in Jacksonville.
Technology is also necessary to provide customers with the same level of service that exists in Europe and the Far East, he added.
Capo also called for eliminating restrictive and redundant work rules. Guarantees and work rules that pay someone when that person is not actually working must be eliminated and existing manning levels, some of which go back to the days when cargo was not shipped in containers but on breakbulk ships, must be reduced, Capo said.
He also called for the cross-training of workers.
“These things didn’t happen overnight, and they did not happen without management’s involvement and approval, tacit or otherwise,” he said. “But together we have to be part of the solution.
Capo also said the ILA has to be more competitive with non-ILA stevedores. He suggested there needs to be separate contracts for short sea shipping operations and for commodities such as bananas and fruit, pointing to the decision earlier this year by Delmonte Fresh Fruit to move its operations from an ILA terminal in Camden, N.J., to a non-ILA pier operated by Holt in nearby Gloucester City, N.J
“The banana business is a cutthroat competitive business.” He said Chiquita and Dole are “asking for consideration, which I think is going to happen. The point I am making is that maybe we need a different sort of contract for those commodities.”
Economic recovery “is not a sure thing” and “freight rates are not recovering as fast and at are not at the levels we expected,” he said.
He said man-hours and freight volumes appear to be on a slight increase in 2011. “It is not great, but it is not as bad as it was the past couple of years,” he said.
Man-hours fell from 30.3 million in 2008 to 25.7 million in 2009 and 26.8 million in 2010.
Tonnage fell from 110.9 million tons in 2008 to 97.1 million in 2009 and 106.9 million tons in 2010.
As Capo finished his speech, ILA president Richard P. Hughes Jr. thanked Capo for his remarks. He also suggested that he and Harold J. Daggett, who is expected to be elected as ILA president on Thursday, “start negotiations next week” for the contract that is due to expire at the end of September 2012.
Laughter in the audience after that remark suggested the contract negotiations may be challenging. ' Chris Dupin