Commentary

At its core, the cold chain industry is strong. Better yet, the challenges transportation providers have faced during the past few years are thawing out, and there’s an undeniable optimism in the air. Spending on refrigerated equipment, cold chain-related software and technology, and services are picking up, and this year is off to a stronger start.

I don’t know about you, but I want to read or hear about something other than the congestion at West Coast ports, the Pacific Maritime Association and the International Longshore and Warehouse Union. Although the nine-month contract “negotiations” that finally brought a tentative agreement on Feb. 20 — and labor relations overall — are critical issues, there are other important issues to address, including the upcoming negotiations for 2015-16 service contracts in the eastbound trans-Pacific.

The Feb. 20 tentative agreement between the International Longshore and Warehouse Union and the Pacific Maritime Association brought a measure of labor peace to the U.S. West Coast waterfront. But after nine months of negotiations marked by labor slowdowns, threats of a lockout and the worst congestion in more than a decade, the scars will be raw for some time.

The Feb. 20 announcement shows why the current system of longshore labor relations is rotten to the core.

Logistics and procurement teams often end up in conflict about how ocean and air freight transport should be procured. Battle lines within major companies are being drawn between these internal groups as the contracting season gets into full swing shortly.

Truck and rail capacity imbalance poised to be even worse than last year.

The end of the White House's hands-off approach to the International Longshore and Warehouse Union-Pacific Maritime Association talks holds risks for the union.

By blaming the ILWU for the congestion it's caused, the PMA employers are killing two birds with one stone: evading responsibility for the employers’ failures, and gaining support from retailers, shipping companies, the public and Congress in hopes of boosting their standing at the negotiating table.

So the International Longshore and Warehouse Union is solely responsible for the humongous mess our West Coast ports are in? It must be so because I read it on JOC.com. My first concern is that perhaps this blame is misplaced. To get at the truth, let's look at the background.

An enthusiast of antique guns finds a good deal on gunpowder when on a trip away from home. The trick is getting that black powder shipped home.

Has the ILWU been tamed? We asked that question in an October 2003 commentary, a year after the 10-day lockout that cost the U.S. economy billions of dollars and in the aftermath of a series of slowdowns and vandalism that summer over new technology at the TraPac terminal in Los Angeles, actions that prompted then ILWU-President James Spinosa and other union leaders to publicly condemn their own rank-and file.

Over the past few weeks, our coverage of the West Coast labor standoff on JOC.com has come under a barrage of criticism from members of the International Longshore and Warehouse Union and their supporters. In comments posted on JOC.com stories, in tweets and e-mails, we stand accused of bias against the union in our coverage.

At the beginning of any new year it seems the standard theme for most business articles is one of predictions, and this year has been no different. I enjoy reading these articles as an opportunity to catch a glimpse of that next thing that has the ability to be a true game changer.

When UPS on Jan. 23 pre-announced fourth-quarter earnings, it shouldn’t have been a surprise. Yet some analysts said they were “troubled by the company’s inability to get peak (operating expenses) right during what is increasingly becoming the most important quarter of the year” and were concerned “that UPS got the service but not the cost, which is going to leave the market wondering if it can only have one or the other.”

The Queen of the Skies is fading away. The Boeing 747, the original widebody jet that has, according to Air and Space Smithsonian Magazine, “transported the equivalent of 80 percent of the human race” over the years, is being taken out of service far faster than industry observers had expected. The 747 is being supplanted by smaller but highly fuel-efficient twin-engine aircraft such as the 787 and the new Airbus A350 XWB (Extra Wide Body). Is there a message in all this for other freight sectors? Is bigger, in fact, always better?

After a load was delivered short, and a proof of delivery late, does the carrier have any blame and financial responsibility for make things right?

Reading the JOC 2015 Annual Review and Outlook, I’m reminded of the continuation of the conflicts between service providers and customers, and question some of the logic in these conflicts.

Among the many topics covered in this year’s State of the Union Address, President Obama discussed two issues that are critical for the continued growth of the U.S. economy — international trade and transportation infrastructure. Both are priorities the retail industry strongly supports.

If you missed what Moffatt & Nichol economist Walter Kemmsies told the SMC3 Jumpstart Conference in January, his words bear repeating. As reported by JOC Group Senior Editor Bill Cassidy, Kemmsies said the biggest threat to global trade isn’t protectionism, war, terrorism, disease or natural disaster. Instead, it’s mounting congestion at ports around the world, a phenomenon that’s been building for years and burst out into the open in 2014.

Congress should pass a new Miscellaneous Tariff Bill in 2015. But lawmakers should also consider sensible enhancements to the Foreign-Trade Zones program, including full funding of Customs automation, expanding direct delivery to speed shipments from ports to zones, and revising the FTZ Act to put companies and workers in U.S. zones on a more equal footing with their competitors in free trade agreement partner countries.

A 3PL says it sometimes prints one or two “original” trucking bills of lading for drivers to sign for receipt. Is it doing the right thing? Or can this create potential problems later?

The honeymoon in the wake of the Federal Mediation and Conciliation Service assuming control of the West Coast talks between the International Longshore and Warehouse Union and its employers lasted less than a week. If anything, the negotiations have reached a nadir since mediators joined the fray, with both sides engaging in a war of words that has busted wide open a mutual pledge the two sides made when this process began last May not to discuss details of the negotiations.

President Obama once again called for dramatically improving U.S. infrastructure and receiving expanded powers to finalize two major trade pacts during last night’s State of the Union address.

Being compliant with trade regulations among various federal departments goes a long way to getting your company where it needs to end up in order for costs to be consistent and predictable.

What will 2015 look like for an industry that has had four consecutive underperforming years? There are many issues to deal with, but let’s focus on the few that mean the most. At the top of the list is the lack of profitability among ocean carriers and West Coast labor and congestion issues that I don’t see clearing up any time soon.

As we approach the TPM Conference in March, it’s hard to recall any year in the 15 years of this event when the industry was more unsettled, more dissatisfied and more uncertain of what the future holds. Such is the result of a monumentally troublesome 2014, when shippers and their providers absorbed more broadsides from more directions and with less notice than any year in memory.

Companies that prefer to keep their operations in-house can leverage some of the best practices used by logistics providers to reduce costs and increase their bottom line.

Although the facts appear to present a dismal picture for the U.S. highway system, some silver linings have emerged as a result of it.

2014 was far from the first year to see waterfront labor issues disrupt cargo flows at U.S. ports. Nor was it the first year to see the formation of large vessel-sharing alliances, big ships, equipment dislocations, truck driver shortages, suspect rail service or unexpectedly strong growth in cargo volumes. Each has been prevalent throughout North American supply chains in given years going back a decade or, in some cases, more. But what made 2014 unique is that they converged simultaneously to form a potent mix that sets the stage for one of the more challenging years in memory for supply chains.

If there is one observation that stands out from the experience of 2014, it’s the complete absence of concern for the shipper in U.S. longshore negotiations. It is fundamentally anachronistic that those who ultimately pay the bills and whose business creates not only all the longshore jobs but also millions more in the larger economy, should suffer the neglect and business disruption shippers do in the U.S. when confronted with labor-management issues on the waterfront.

Employers need more cost reductions and workplace flexibility on the U.S. West Coast docks to handle the big ships coming their way, and the sum total of progress from all the rounds of earlier negotiations isn’t enough to justify the investments that will be needed.

I find myself marveling at the astonishing pace at which another year has come to an end. I thought I would take a moment to look back at 2014 and at some of the more noteworthy items within the context of People, Processes and Enabling Technology.

The “Obama is soft on the unions” explanation seems questionable, as sending a federal mediator and invoking the Taft-Hartley Act aren't easy cures.

An owner-operator shares some often overlooked facts about U.S. truck driver hours of service rules and how they affect his business.

Can the International Longshoremen's Association and United States Maritime Alliance tweak their bargaining process so that it doesn't scare shippers every three to six years? We'll find out ... eventually.

2014 will surely go down as a momentous year — and not in a good way — for those who depend on international container transportation. Hardly a year of progress, this was a year when the system regressed.

The less-than-truckload industry saw some resurgence in 2014 with carriers’ ability to dig out of suboptimal returns from low-single-digit operating margins. Third-quarter results for publicly traded LTL carriers show a collective operating ratio of 92, a significant improvement from 94 a year ago. This should give LTL carriers optimism about achieving a much-needed 10 percent operating margin by the third quarter of 2015.

From crumbling roads and bridges to congested airports and a “vast majority of seaports in danger of becoming obsolete,” a 60 Minutes television newsmagazine feature pulled no punches about the risks not only to U.S. competitiveness and freight supply chains, but also to the safety of the American public.

If a seal is broken or missing, should a motor carrier be held liable for the destruction of perfectly good boxed, skidded or palletized freight that shows no evidence of contamination or malicious tampering?

The International Longshore and Warehouse Union's monopoly has kept its wage and benefits package so out of the line with other U.S. workers, and prevented major productivity improvements at U.S. West Coast terminals.