Project Overview

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POTENTIAL WEST COAST DOCK STRIKE
Presented By
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POTENTIAL WEST COAST DOCK STRIKE

• Agenda
• The Issues
• Parties Involved
• Speculations
• Learning from the past
• What to plan for
• Contingency recommendations

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Potential West Coast Port Strike The Issues

• What are the issues surrounding this potential
  strike??
• Chassis Business
• Carriers are getting out of the chassis business
  and transitioning to 3rd party chassis rental
  companies.
• Repair work will be a large job sector in the
  future as cranes and cargo handling machinery at
  ports become more automated.
• Jurisdiction
• ILWU sees this as a trend which will cause job
  loss for union members.
• ILWU will aggressively protect existing jobs
  repairing chassis at ports and will go after new
  jobs performing maintenance work at third party
  chassis companies and operating newly introduced
  automated machinery.
• Inter-Union rivalry over reduced number of jobs.
• ILWU also looking for jurisdiction on jobs at
  grain terminals

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Potential West Coast Port Strike - The Issues
contd

• Pay Benefits
• Healthcare welfare cost and coverage are
  additional sticking points
• As a result of the Affordable Care Act, federal
  taxes of an estimated 150M will be imposed on
  ILWU healthcare plans to take effect in 2018.
• Any new contract would likely only have validity
  to mid 2017 as the sides argue who will be
  responsible for the increased taxes.
• Wages are not a major issue in this particular
  negotiation.

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Parties Involved

• PMA (Pacific Maritime Association)
• Otherwise referred to as the Employers
• Represent the West Coast terminal operators and
  shipping companies in their dealings with the
  labor unions.
• President and CEO of the PMA James McKenna
• ILWU (International Longshore and Warehouse
  Union)
• Otherwise referred to as the Union
• Represent the West Coast Dockworkers
• President Robert McEllrath

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Speculations

• PMA President Jim McKenna predicted that an
  agreement will be reached in mid to late July.
  This prediction may still make cargo interests
  nervous, given the fact that the current six-year
  contract will expire on July 1, but it reflects
  the reality of the negotiation process.
• Bill Mongelluzzo, Senior Editor, Journal of
  Commerce (JoC March 2014)
• The issues are tough, so prepare for a slowdown
  in July and August. Ship early on because there
  will be major slowdowns.
• Robert Lanier, executive director of the
  Waterfront Coalition (JoC November 2013)
• Unfortunately, uncertainty has become all too
  common over the past year on the West Coast The
  result is that today exports and importers remain
  continuously concerned that a disruption of the
  supply chain could occur at the ports, at any
  time, with little if any warning.
• Peter Friedmann, executive director of the
  Agriculture Transportation Coalition (American
  Shipper October 2013)

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Learning from the past

• The 2002 lockout was 10 days and estimated to
  have cost upwards of 10B.. No one wants nor can
  afford a repeat (still fragile economy and
  competitive market with East Coast and Canada
  ports expanding market share in past 3 years)
• The ILWU did not strike in 2002, the PMA locked
  the Union out.
• 2008 contract negotiations produced framework for
  technology, which facilitates negotiations in
  2014.
• Both James McKenna and Robert McEllrath
  negotiated the 2008 contract for their respective
  sides.

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What to plan for

• Slowdowns are expected
• Backlogs at the ports
• Extended rail transit due to backlogs
• Equipment shortages
• Increased costs
• Significant carrier congestion surcharges
• Additional warehouse costs

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Contingency Recommendations

• Ship Early
• Bring product in prior to the strike to avoid
  delays and missed customer commitments
• Considerations
• Potentially Additional Warehouse Space Needed
• Solutions
• Additional Space may be available in both our St.
  Louis and Minneapolis facilities if needed

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Contingency Recommendations

• Alternate Routings
• Ship via Vancouver and/or Tacoma/Seattle
• Considerations
• Tacoma/Seattle and Vancouver Longshoremen are
  also part of the ILWU and all took part in the
  work slowdown that lead to the PMA Lockout of
  2002.
• In the event of a strike or slowdown, booking far
  in advance will be key as these routings will be
  inundated quickly.
• Some carriers currently routing via
  Seattle/Tacoma may naturally divert via Vancouver
  should strike/slowdown occur.
• Cost Possible transshipment costs.
• Ship via Houston
• Considerations
• Longer transit time (Addl 15-20 days)
• Increased cost Transshipment / Trucking
• Approx 1100 - 1500/CTNR additional
• This routing will also be quickly inundated,
  planning is key.

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