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Larry Thomas

Port operators, unions delay ‘container cliff'

Larry Thomas Business editorLarry Thomas Business editor
While much of the nation's attention was focused on the so-called fiscal cliff as 2012 ended, furniture importers were much more concerned about a "container cliff" that nearly resulted in the shutdown of 14 ports on the East Coat and Gulf Coast.
     And while a strike by the International Longshoremen's Assn. was averted roughly 48 hours before its contract with port operators was to expire at midnight Dec. 29, the two sides mirrored the fiscal cliff negotiators by the way they "resolved" their dispute.
     They reached tentative agreement on some issues - including the contentious container royalty payments - but put off finalizing a new contract until February.
     That means the edge of the cliff has been extended until Feb. 6, when importers will again be looking at an East Coast and Gulf Coast port strike if a new contract agreement isn't in place.
     The latest extension is the second since the original six-year contract expired Sept. 30, and we won't be surprised if nothing is resolved until shortly before, or even shortly after, Feb. 6.
     However, it is clear the tentative agreement on container royalty payments is a major milestone. Both sides appeared to be holding firm to their positions, and had traded incendiary press releases on the subject in the days leading up to the December contract expiration.
     But according to the Federal Mediation and Conciliation Service, which is overseeing the negotiations, the issue was "agreed upon in principle" on Dec. 27. The mediation service hasn't disclosed the substance of the container royalty agreement, but a statement from FMCS director George Cohen said it was a "major positive step toward achieving an overall collective bargaining agreement."
     "While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the upcoming extension period," Cohen said.
     Container royalties are, in effect, supplemental wage payments that shippers make to union members based on the weight of the cargo and the number of hours the union member works during the specified period. In recent years, such payments have added $10,000 or more to each worker's paycheck annually.
     They were initiated in the late 1960s as a way to compensate dockworkers for lost job opportunities as containerized cargo shipments became popular. Before the 40-foot container became the norm, dockworkers had to load and unload shipments in bulk, and that meant more dockworkers had to be hired every time a cargo ship called on a port.
     Throughout the talks, the union has maintained that these royalty payments are "untouchable." Port operators contend they have outlived their usefulness, and note that the vast majority of today's dockworkers weren't born when the payment system began in 1968.
     Port operators had proposed eliminating the payments for newly hired dockworkers and capping them for existing workers.

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