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US West Coast deal agreed, but East Coast facing own challenges

Industrial actions by ILWU locals in the Pacific Northwest and Southern California, which lasted a week, were lifted on Monday and after Whitehouse intervention a new contract agreement has been announced, but Panama Canal navigation restrictions are impacting vessels serving East Coast ports, with carriers imposing surcharges.

After a week of unofficial industrial action disrupted operations at West Coast ports including Los Angeles, Oakland, Tacoma, Seattle and Hueneme, US Labor Secretary nominee Julie Su trade met with the Pacific Maritime Association (PMA) and International Longshore and Warehouse Union (ILWU) in an attempt to defuse tensions and reinvigorate labour contract negotiations.

After almost 13 months of contract negotiation and no agreement on key issues, it seemed that some ILWU members had ran out of patience and prepared to “fly their muscle”, while impatience within the PMA had also been growing, due to months of delay in talks and the labour unrest up and down the West Coast, with the JOC reporting that the possibility of a lockout by employers had risen to “50-50.”

Despite the recent rancour, it appears 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, with the ILWU seeking to essentially double the straight-time hourly wage, while the PMA had been been offering 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.

We are US experts, with daily import/export air freight services, full load container departure on next vessel and weekly groupage services to most destinations.

EMAIL our managing director, Colin Redman for more information, advice and guidance.