Circle the Dates!
Get out your calendar and circle the following dates in 2008: March 31, July 1, and July 31. Those are the dates of union contract expiry for the Teamsters-LTL contract, the International Longshore and Warehouse Union (ILWU) contract with the Pacific Maritime Association and the Teamsters-UPS contract respectively.
March 31, 2008 - LTL / Teamsters contract
July 1, 2008 - ILWU / PMA contract
July 31, 2008 - UPS /Teamsters Contract
Prudent supply chain managers are certain to monitor industry press tracking these negotiations, because collectively they could add up to a "perfect storm" of organized labor leverage if one or more goes into protracted negotiation or a strike situation.
The increasing trend toward practice of "Lean logistics" mean more frequent, smaller shipments and generally less inventory on hand. That could mean freight diversion away from union carriers if shippers get nervous about the possibility of a strike. Bear Stearns' recent First Quarter 2007 review of Air Freight and Surface Transportation examined this subject.
According to the Bear Stearns survey, right now 36% of shippers plan to divert freight from their normal shipping patterns only if problems occur. 14% will divert LTL as a contingency, while 50% of shippers say they won't make any changes to their normal shipping patterns. We are a within a year of the first contract expiration and just 13 months for all to be in play. Should contract talks drag in any of the three however, percentage diversions to non-union carriers will shift.
Early Talks Planned.
UPS - Teamster talks commenced months ago in preparation for a long haul discussion. One key issue to watch will be how the underfunded Teamsters Central States Pension Fund is handled. UPS wants out of it,as does ABF. Yellow Roadway Corp., is on the fence about its position. The Teamsters have factions against any revision to the pensions. UPS is the largest Teamsters employer and has wanted to set up a different pension fund for its member employees. ABF had indicated a desire to do the same if UPS got its way. Recent discussions however have shown that UPS is willing to set up a joint UPS/Teamsters managed pension trust.
On May 17th, The ILWU and the PMA announced a decision to pursue early contract negotiations hoping to reach agreement prior to the expiration of their 6 year contract in July 2008. Bear Stearns' review indicates some confidence on the part of ocean shippers as 63% are not planning changes to routing, while 13% plan to divert some container traffic. 24% said they would only divert in the case of a problem.
Unlike LTL and TL, there are limited options for diversion of ocean freight. There is only so much east coast capacity from Asia and it is going at a premium. Mode shift to air freight is a possibility but that would be for only those most urgent shipments. Given the softening economy and 2008 election year, all parties will have motives to "get it done" and renew agreements.The economic cascade effect of a massive strike under any of the three contracts would be very hard on the US consumer.
With this many labor contracts up at once, the 12 months will be interesting!
Eric
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The Teamsters web site has some interesting updated info on both the UPS negotiations AND the "LA Port Blitz". The LA Port Blitz involves a move to get all trucks that enter the Los Angeles Port complex to be approved by LA Worldport as safe and environmentally clean. The Teamsters would also like those approved trucks to be union members.
UPS-Teamsters Negotiation Update:
http://www.teamster.org/07news/hn_070510_3.asp
Early May information on the LA Port Blitz
http://www.teamster.org/07news/hn_070509_1.asp
Posted by: Eric | June 01, 2007 at 12:57 AM