Here’s an example of route changes now occurring due to disruptions and freight relocation. Maersk and Hapag-Lloyd are dropping Baltimore from their TA3 transatlantic container service, and adding Philadelphia.
The new rotation is Southampton – Rotterdam – Hamburg – Wilhelmshaven – Newark – Norfolk – Philadelphia – St. John – Southampton. The new schedule kicks off with the sailing of the Maersk Fredericia from Southampton Jan. 4.
The reason offered is the handicapped service at Baltimore due to the collapse of the Francis Scott Key Bridge in 2024, when the Dali ran into an abutment, collapsing the bridge. The rebuilding will take longer than anticipated. The bridge collapse has restricted access to some berths in the port of Baltimore. That has affected throughput at the port.
The article says:
For ocean carriers, calling Baltimore adds several days’ transit time compared to Norfolk, Va., and Philadelphia. Ships have to navigate 150 miles through the Chesapeake Bay, among the longest ship channels in the world, according to a 2019 study by Texas A&M University. The route also requires the services of multiple local pilots to guide vessels in, along with a separate docking pilot at the port.
Now is the time for labor unions to press ports and railways for new benefits for workers. There is a perfect storm of labor stoppages about to take place.
Thursday (that’s two days from this writing) the Teamsters Canada union (TCRC) expects to strike the CPKC railroad, one of the two largest in Canada. CPKC is also a large US and Mexico railway, and we’ve yet to see if US unions will honor a Canadian strike. The Canadian National (CN) rail line has blocked the strike by giving a lockout notice to the union. So there’s a high likelihood that most Canadian rail shipments will be shut down later this week.
The TCRC has turned down offers made in January, April and May. The labor agreements with the rails expired at the end of 2023, and the workers are working under the old contract. There have also been some rules changes by the government to reduce fatigue, that are not accounted for in the contracts. In fact, the union claims the rails want to ‘gut the collective agreement of all safety-critical fatigue provisions’. That may be hyperbole, but it’s indicative of the bitterness of disagreement.
The Teamsters represent about 10,000 workers. The Labor Minister has not issued an order for binding arbitration, so it’s likely there will be stoppages.
The cessation of rail movements means there are likely to be major disruptions at ports, where rail takes goods into the interior of Canada and also to the US. The rails are already announcing embargos which mean that they will not accept new shipments in certain areas because of expected port congestion.
The Port of Vancouver has already ordered ships on their way there to slow-steam because they fear they will not be able to move cargo out or into the port.
To top off the labor confusion, the US East Coast Ports are engaged in negotiations with the International Longshoremens Association (ILA), the major union representing 85,000 members. The ILA has indicated that October 1 will begin a strike if a new contract is not agreed. There does not seem to be a clear path to agreement.
Shippers and Ocean Carriers are already preparing. Cargo is shifting to the West Coast US Ports, where an agreement was completed last year. I expect the East Coast ILA members expect similar if not better contracts, because East Coast ports have been prospering for the last couple of years. Their first glitch was when the Panama Canal reduced its traffic due to an extended drought. Traffic started shifting to the West Coast then. Now the Panama Canal is near its former levels, and traffic is rising again. The East Coast Ports do not need a strike right now.
But that’s exactly why the unions are playing hardball.
Apparently the negotiations between the Pacific Maritime Association (PMA) and the International Longshore Workers Union (ILWU) are not going well over wages.
Some peripheral issues have been settled, but union workers want a share of the massive profits generated by the container carriers during the COVID time. PMA represents ocean carriers and terminal operators in the negotiations, and some terminals are controlled or dominated by a carrier or a group of them.
I think that is appropriate. Anyone’s analysis of the labor economics of unions will indicate that unions only have occasional times when they have any leverage over their terms of employment. This is one of them.
They should be expected to bargain hard for wage increases because they have not had a new contract since 2015. A lot of water has gone under the bridge, including massive profits for ocean liner firms. Longshoremen played a large part in the successful import and export of all those containers.
The PMA has not had a good record of conducting these negotiations, sometimes playing hardball when their sponsors would have liked a little softer approach. It’s true that the ILWU is known for its intransigence also.
But now the PMA should make a realistic offer. Inflation is high, there’s no prospect of it moderating very much very soon, and there are all those past years to make up for. Longshoremen deserve to be paid fairly for their work in the light of present, and possibly future, economic conditions.
These incidental stoppages for short times are just warnings. Neither side should want a general strike, because the new increases in West Coast shipping, after a long decline, are just emerging. It’s true some traffic has left for the East Coast, but the facts are that West Coast ports that operate well are still the fastest and most reliable way to ship to America from the Far East. If they are seen as reliable, traffic will return.
Time to step up and make an offer longshoremen are likely to accept.
Supply Chain and Logistics 