Clearit.ca's Blog on Customs Brokerage and News Updates
Longshoremen at West Coast ports have been working without a contract since the beginning of the month, raising concerns of a disruption along the lines of the 2002 lockout. A six-year agreement between the Pacific Maritime Association (PMA), which represents port operators, shippers, and stevedores, and the International Longshore and Warehouse Union (ILWU), representing dock workers, expired on July 1st.
Both Sides in Negotiations
The two groups have been trying to negotiate a renewal for the last couple of months, and it hasn’t been uncommon for past renewal negotiations to drag on for some time beyond the end of a contract. That happened in 2008, when a new agreement was eventually approved without a labor stoppage. In 2002, however, port employers accused the ILWU of a slowdown and implemented a lockout that ended after 11 days when the Bush administration secured a court order against it.
This time, both the ILWU and the PMA have committed themselves to avoiding disruptions to cargo operations while negotiations are ongoing. But they declined to extend an anti-strike provision in the old contract, which appears to mean that a strike could occur if talks break down.
Customs Developing Contingency Plans
U.S. Customs and Border Protection (CBP) is taking that possibility seriously, and recently published a document titled “Interim Procedures for Vessel and Cargo Entry Processing For Possible West Coast Trade Disruptions”. It provides guidance to shippers for developing contingency plans for a strike and describes the procedures that will be in effect if that happens. Filing requirements for several scenarios are covered, including diversion of a vessel to a foreign port, another West Coast port, or an East or Gulf Coast port, and discharge/non-discharge of cargo in each of these situations.
There are special provisions for shipments subject to Food and Drug Administration (FDA) Bio-Terrorism Act (BTA) prior notice submission requirements. The CBP has clarified that the Customs-Trade Partnership Against Terrorism (C-TPAT) initiative will remain effective in the event of a strike, so that C-TPAT-certified shippers will continue to enjoy expedited processing of their goods. The FDA provided input on the guidelines and continues to worth with the CBP to refine procedures for cargo over which it has jurisdiction.
Cargo Carriers May Have to Reroute Shipments
If there is a strike or other significant labor disruption on the West Coast, cargo carriers will have little choice but to reroute shipments through Canada, Mexico, or possibly the U.S. East Coast. That’s likely to prove time-consuming and expensive, though: there’s simply not enough capacity to readily absorb the runoff from a West Coast shutdown, and hefty congestion fees are sure to be imposed on cargo that can be accommodated.