The International Longshoreman’s Association (ILA) has cancelled today’s (June 11) scheduled talks on a new six-year contract agreement. The Union provides labor for the U.S. Gulf and East Coast ports. The issue at hand is which labor claims are violations of its existing labor agreement on automation at the port.

ILA’s statement said that projects by Maersk and its APM Terminals subsidiary at the Port of Mobile are utilizing Auto Gate system, which processes trucks without ILA labor.

The Journal of Commerce quotes the ILA as stating, “This system, initially identified at the Port of Mobile, Alabama, is reportedly being used in other ports as well,” ILA said. “This is a clear violation of our agreement with the USMX [and we will not tolerate it any longer.”

The current master contract is set to expire Sept. 30. ILA is adamant they are not returning to talks until the automation agreement violation is rectified. Should the dispute continue through the Sept. 30 contract deadline, the Gulf and East Coast ports could face a strike – something that hasn’t happened in 50 years.

Maersk has countered that the tech projects do not violate the master contract with the ILA and restates they want to resume talks.

By Gary Williams, SSGA director of transportation and regulatory affairs

We are watching…Canada. The Teamsters Canada Rail Conference (TCRC) Union is voting during a period beginning April 8-May 1 on a potential strike date of May 22. The union members involved count 6,000 on the Canadian National (CN), and 2,500 on the Canadian Pacific Kansas City (CPKC). The collective agreement with CN and CPKC expired on Dec. 31, 2023.

Talks between the sides are continuing with a federal conciliator who can broker a deal up until May 1, when a 21-day cooling off period begins before any strike could occur. The union would then have to issue a 72-hour strike notice to the two Canadian railroads. According to CN’s website, on April 11 the railroad proposed an improved offering to the Union, focusing on wages, job security and guaranteed earnings.

Shippers in Canada are relating to SSGA that the CN has a very positive tone on being able to avoid a strike. Canadian Pacific has been more cautious. CPKC directly serves several grain elevators in North Dakota and Minnesota, which usually moves through Canada and is handed off at Kingsgate to reach U.S. export facilities. It also handles intermodal volumes to Vancouver, BC to/from inland ramps in Minneapolis, Chicago and Milwaukee.

We will continue to monitor the situation and assess potential impacts to intermodal and covered hopper grain movement.

SSGA also has its eye on changing sailing dates and the impact on members.

Our Competitive Shipping action team is spending some time collecting information and analyzing typical cases of steam ship lines (SSL) changing voyage dates abruptly even after containers have started pulling on a booking, moving the Earliest Return Date (ERD) out in the future and disallowing further containers to be pulled. While they will receive the loaded containers in, not being able to continue pulling and loading results is disrupting the trucking that has been secured, can create cash flow impacts on producers, slow or stop processing lines at the conditioning plant, result in split bookings which customers may not accept due to fixed costs and fees being spread out over fewer containers. Customers may not always be able to accept double bookings in the same week due to a lack of free time at the destination yard and limited warehouse space. Additionally, a number of other logistical issues, trade-offs and costs often occur.

Overall, not being able to smooth out these delays and disruptions create higher costs in our businesses, loss efficiencies and a number of costs not seen by the SSL.

We understand that delays in voyage arrival/sailing dates are often unavoidable, but our hope is to discuss and propose solutions that could help smooth out the disruption to mitigate the effects after we can delineate the impacts and costs that occur. Certainly, we continue to have reputable cost as the U.S. prides itself on having the highest reliability in the world – an important component that makes U.S. identity preserved field crops desired as the number one choice!

We encourage all members to let action team chair Tina Lyons or myself know your own cases, and help us quantify the outcomes when these late changing dates are experienced.

Of current concern for much of the agriculture industry is the request from the California Air Resources Board (CARB) for authorization of regulations that would target key aspects of the operation of freight locomotives in California. The proposed regulations would 1) levy annual fees on rail carriers for deposit in accounts that can only be used to comply with the regulations; 2) require the decommission of locomotives 23 years or older beginning in 2030 and require that new switch, industrial and passenger locomotives operate in zero-emission configuration (2035 for new line haul locomotives); 3) attempt to regulate locomotive emissions by requiring railroads to shut them down while in transit in certain circumstances; and 4) impose certain reporting and “administrative payments.”

National Grain and Feed Association (NGFA) describes the effects as:

“If the CARB regulations were authorized by EPA, we believe freight rail carriers would be significantly hindered financially and operationally and, in turn, shippers and their customers would be impaired. The inevitable increases in transportation costs and introduction of operational inefficiencies for agricultural shippers and receivers would result in food price inflation.

Moreover, the proposed rules would require railroads to meet regulatory goals that cannot be reached. Specifically, zero emissions locomotives would have to be purchased to replace the decommissioned locomotives, but such locomotives are not yet commercially viable and won’t be in the foreseeable future.

Presumably, battery technology would need to be utilized to meet the zero-emission requirement. While battery powered locomotives have been tested, they are not presently commercially viable primarily due to a limited operating range.”

SSGA will be engaged on the matter as it certainly would affect the pricing and timely movement on containers and covered hoppers moving through California, a vital point of discharge for our stakeholders shipping to markets in Asia. The rail network is interconnected, with about 65% of the locomotive fleet going in and out of California.

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As Red Sea attacks continue to hamper the global shipping industry, several Asian countries are employing measures to help shippers.

The South Korea Ocean and Fisheries Ministry launched a program to provide a guaranteed 400 twenty-foot equivalent units (TEUs) of spot capacity for small and medium sized businesses on sailings leaving South Korea to Europe and the Mediterranean. Cargo owners utilizing long-term contracts will be guaranteed an extra 1,100 TEUs. Carrier HMM also agreed to use four extra loaders to help with the capacity crunch. Read more here.

Meanwhile, the Vietnam Ministry of Transport asked carriers to justify the soaring freight rates to Europe and North America and increase those connections.

In the U.S., parties interested in participating in the Federal Maritime Commission’s public hearing about the Red Sea and Gulf of Aden conditions can submit their request to participate to secretary@fmc.gov. The Feb. 7 hearing will allow stakeholders to communicate with the FMC about the disruptions. Learn more about the hearing and the FMC’s advisory about surcharges here.

Other notable stories:

A story by the New York Times features infographics showing changes in shipping routes since the Houthi attacks.  View the article here.