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Thursday, November 14, 2019

Maritime Logistics Professional

Cry Babies and Unions Weaken Their Bargaining Position

Posted to Martin Rushmere (by on September 17, 2010

A meagre defense in the battle over antitrust

When trade unions oppose an economic proposal, you know the measure has merit. That sums up the attitude of the maritime industry today, which is exasperated at the motives and antics of the dockworkers on both seaboards of the country.
This puts the container lines in an awkward spot. They oppose, predictably,   Congress's plan to knock over antitrust exemption for the carriers, as enshrined in the TransPacific Stabilization Agreement.
Joining them are the unions, which now say that carriers, customers and labor should meet to talk about the matter -- not a very original or bold suggestion. "The ocean shipping industry, unlike the airline industry, has no barriers to entry … the ocean shipping industry is not concentrated at all," say the unions in a letter.
The logic is sure to bring a hollow laugh from observers, as it implies that dockworker unions, which have a huge barrier to entry, should themselves be dismantled. But their argument misses the point because the industry is tired of the impossible-to-believe coincidence of the lines setting the same rates in the trans-Pacific trade. No one cares about being "concentrated."
The lines, in the form of the World Shipping Council, bring up the Great Recession in their defense and say they have gone through a tough time and are only now returning to profitability. A huge amount has also been invested in new equipment, they say.
Which also seems to miss the point. "Cry babies" is probably the simplest way of describing the reaction of the industry to carrier woes during the recession. The real angst is over rates being uniformly set in good times and bad.
The National Industrial Transportation League gets to the point. The lines "enjoy an extraordinary measure of protection from competition, but their customers have to live or die by the sword of market competition," says the league, backed up by at least 30 other interested groups. ""This extraordinary privilege may have made sense some 100 years ago, but in today’s fully integrated global marketplace, competition rather than joint carrier discussions should be the determining factor which governs the price for moving freight.
"Liner carriers in the U.S. westbound and eastbound Pacific trades have charged identical and/or very similar rates and terms for carriage and uniformly applied surcharges. Carriers have ‘rolled cargo,’ and refused to load cargoes without additional compensation. In doing so, carriers often ignore contractual service commitments and prohibitions on the unilateral imposition of surcharges. Shipper protests have been largely ignored by carriers, and these disputes are mooted by the need to move the cargo."
Those are the arguments that the lines and the unions should be countering. Instead of which, they seem happy to skirt round the issues.