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Sept.21, 2015

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TRADING PLACES 38 THE JOURNAL OF COMMERCE SEPTEMBER 21.2015 Peter Tirschwell TYPICALLY, ONCE A U.S. longshore negotiation is settled, the affected ports revert to a state of normalcy de s pit e w h a t e ver d i s r up t ion occurred during the talks. U.S. West Coast negotiations over the past 20 years have never been without disruption but were always followed by near-normal operations that lasted for years in some cases. The six years leading up to the June 30, 2014, expiration of the recent ag reement bet ween waterfront employers and the International Longshore and Warehouse Union saw only sporadic disruption. But there is a difference between then and now: The ag reement reached on Feb. 20 failed to resolve all issues, and one in particular — chassis maintenance — holds the potential for sparking further dis - ruption and uncertainty for shippers. No one knows yet if the agree- ment, which continued the ILWU's long-standing jurisdiction over most maintenance and repair of chassis at West Coast ports, is actu- ally legal. That likely will need to be determined through litigation. Fol- lowing the 2007-08 financial crisis, most container lines began divesting their unprofitable chassis operations to lessors that had no interest in hav- ing the highly paid ILWU perform maintenance when it was cheaper to take on the work themselves. Because lessors aren't members of the Pacific Maritime Association, they don't feel bound by the contract, which requires an ILWU inspection of the chassis before it's allowed to be hauled out of the terminal. TRAC Intermodal, one of the largest U.S. chassis lessors, told ter- minals in July that invoices received for ILWU safety inspections per- formed at West Coast marine term- inals "are inappropriate and not compliant with the law." Chas- sis owned by truckers are exempt from ILWU inspections, but truck- ers complain that dockworkers can make life miserable for truckers by demanding paperwork or other- wise delaying their movements. The issue isn't just explosive on the West Coast. On the East Coast, the Ameri- can Trucking Associations, among others, has disputed the legality of mandatory "roadability" inspec - tions at the New York-New Jersey port and is objecting to them on the West Coast as well. "Our position is the ILWU has no legal authority over the chas- sis either in repair, maintenance or inspection, and the PMA doesn't either so there was no way they could negotiate anything," said Curtis Whalen, executive director of the ATA's intermodal conference. He said federal law requires a chas- sis to be "roadable" when it's initially tendered to the trucker by what is known as the intermodal equipment provider, typically before the trucker arrives at the terminal. The Federal Maritime Commis- sion, responding to complaints filed by port drayage carriers and lessors, told terminal operators and shipping lines to produce information on the man- datory chassis safety inspections by ILWU mechanics as stipulated in the contract. The information was due on Aug. 10. The ATA has separately com- plained to the Federal Motor Carrier Safety Administration, which over- sees all aspects of trucker safety. But no litigation has been initi- ated, so no roadmap, at least through the courts, is in place. That may be a good thing from shippers' perspective in that there would likely be fewer bumps over the next four years until the ILWU and PMA hash out the next labor agreement in 2018 or 2019. An ILWU that is backed into the corner can only mean trouble, given the union's raw power to inflict economic dam- age, as shown in the impact the West Coast disruption had on the anemic revised 0.6 percent first-quarter U.S. GDP as cited by the Federal Reserve. The importance the ILWU, and the International Longshoremen's Association on the East Coast, attach to the issue can't be overstated. The months of disruption orchestrated by the ILWU were partly related to the union sending a hardly subtle message that it would not tolerate the loss of chassis M&R jurisdiction. To the ILWU, that would violate a core understanding with employ- ers where the union conceded to advances in container-handling automation in prior contracts in return for a guarantee of continued jurisdiction over chassis. "We agreed to automation. A promise is a prom- ise," ILWU Local 13 President Bobby Olvera said in June. All this shows how the multiyear effort by carriers to rid themselves of chassis has proved more difficult than anticipated. Carriers com- plain of too few chassis provided by lessors at gateways such as Los Angeles-Long Beach, delaying cargo movements, and the pooling practice among lessors to ensure interchange- ability of chassis among truckers terminals remains in its infancy. One wonders if the carriers are beginning to regret their decision. The reality is that carriers and the larger industry need a function- ing chassis regime; chassis make intermodal transportation possible, and the carriers and their customers need the ILWU to keep cargo mov- ing, knowing it can flip a switch and do the opposite. The carriers, not to mention West Coast ports still reeling from a loss of market share, have much to lose if this spins out of control, and the carriers aren't without influence in forcing a solution. The real venue for this to get resolved is in private dis- cussions — even if no one is likely to be fully pleased with the results. JOC Contact Peter Tirschwell at and follow him on Twitter: @petertirschwell. NAILING A CHASSIS FIX

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