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Global effects of Baltimore port strike at center of local contract talks

When a three-day strike by local longshoremen forced the 718-foot CCNI Antofagasta to sail out of the port of Baltimore without unloading its container cargo, the effects rippled across the country and overseas.

Several shipping lines scrambled to reroute dozens of Baltimore-bound containers north again after the ship brought them back to Cartagena, Colombia, according to documents obtained from the Maryland Port Administration through a Maryland Public Information Act request. Chicago customers expecting to reuse Antofagasta containers emptied in Baltimore instead had to order them by rail from Savannah, Ga. The Antofagasta burned nearly 40 tons of additional fuel to make up for lost time and arrive on schedule at the Panama Canal.

In the six months since, the cost of those global disruptions and others caused by the strike has become a central issue in the labor negotiations at the port of Baltimore. The International Longshoremen's Association Local 333 and the Steamship Trade Association of Baltimore remain stuck in the same local contract dispute that sparked the October strike.

Federal arbitrator M. David Vaughn ruled in January that Local 333 violated a "no-strike" provision in a master contract governing container cargo at ports from Maine to Texas. As a result, he ordered the local to pay shipping lines and port operators nearly $3.9 million in damages for unexpected costs and lost revenues during the strike, but left the door open for some other resolution.

Local 333 called the strike because of a dispute over a proposed local contract that covers automobiles and other break-bulk cargo, as well as work rules. Baltimore's three other ILA locals honored the picket lines, paralyzing the port's public terminals.

"It's really uncharted water for most of us. We simply haven't had this kind of circumstance in the past," said David Adam, chairman and CEO of the United States Maritime Alliance (USMX), which represents the lines awarded damages.

After the arbitration award, ILA Atlantic Coast District President Dennis Daggett urged Local 333 members to again reject the "best and final" local contract offered by the STA in a vote Feb. 10, arguing that union leaders could use the unsettled contract as leverage to reduce the damages.

Daggett said the award would be "financially devastating" to the local union and its 1,200 members if allowed to stand. The membership listened and rejected the contract, even as some port customers were diverting cargo for fear of another strike.

Whether ILA officials will be able to negotiate down the damages, and how the damages will be paid if they can't, remains unclear.

On Wednesday, Daggett held a meeting with hundreds of Local 333 members to discuss where he and other union negotiators stand with the damages. Several longshoremen outside the meeting declined to comment on what he said.

Jim McNamara, the national ILA spokesman, said Daggett and other officials could not comment on pending negotiations.

"They are still involved in trying to help Local 333 and help Baltimore with the whole negotiating issue, and of course the issue of the award," McNamara said. "It's still hot and it's still ongoing."

Daggett thanked Local 333 members in a letter dated Friday for their "huge turnout" at the Wednesday meeting and told them they are "not alone" in facing the steep damages award.

"We are committed to assist you to achieve a fair and equitable local contract and to remove any financial burdens or obstacles that are an attempt by employers and a misguided arbitrator to weaken your efforts for union representation," Daggett wrote.

Michael Angelos, president of the STA, said in an email that the STA "is confident that we will be successful working along with USMX to settle the arbitrator's damage award."

Angelos said he expects Local 333 members will sign the new local contract as well, but declined to discuss details of the negotiations because of their "sensitive nature."

Riker "Rocky" McKenzie, president of Local 333, declined to comment.

The local contract negotiations have "kind of stalled" over the question of payment on the damages, said James White, executive director of the Maryland Port Administration, a state agency that owns the port's public terminals. White questioned whether a resolution to the contract impasse would be enough incentive for master contract carriers to forgive the damages owed them.

"You have to ask yourself, 'Why would the master contract carriers … give up any of those funds?'" he said.

Adam said USMX has plenty of incentive to find a solution with Local 333 because it must continue working with the local union — Baltimore's largest — after the current six-year master contract expires.

To that end, he said, USMX is willing to discuss the damages with Local 333, but any resolution would have to include a "fair settlement" with enough teeth to deter another strike.

"We're trying to find some middle ground that creates an environment where it's in their best interest not to do anything like this again," Adam said. "We need to continue to produce. Baltimore is a pretty high-production port, and we don't want to do anything to damage that."

As with the negotiations, officials have been tight-lipped about the nature of the damages. Vaughn, the arbitrator, called the arbitration process "confidential," and declined to comment for this article.

However, documents obtained in the Public Information Act request — including Vaughn's full arbitration opinion — provide a complex accounting of the losses and costs, and depict how the strike rippled globally.

The Antofagasta, for example, was the only ship identified as having left Baltimore during the strike without being worked. It not only carried cargo for CCNI, a Chilean shipping line, but also for CSAV, another Chilean carrier, and the German carrier Hamburg Sud, according to Vaughn's opinion.

The 1,000-foot container ship MSC Michaela, which sat idle in Baltimore during the strike before being worked, had to make up time later by omitting a subsequent port call in Freeport, Bahamas, where it was supposed to unload 146 containers and collect another 626, according to the opinion. It instead unloaded the Freeport-bound containers in the Dominican Republic, where they had to be loaded on another vessel for shipment to Freeport.

The report said the ACL Atlantic Conveyor, a 958-foot container and rolling cargo ship, burned 27.5 tons of additional marine diesel oil to keep its systems operating while waiting to be worked in Baltimore, then an additional 230 tons of heavy fuel oil and 6 tons of additional marine diesel oil to increase its speed on subsequent legs to regain the three days it lost to the strike.

The carriers and Ports America Chesapeake, which operates Baltimore's public marine terminals through a public-private partnership with the port administration, said they also incurred other costs.

In all, Ports America Chesapeake and six carriers asked for a total of $4,108,936 in damages, according to the opinion: about $1.3 million for Ports America Chesapeake; $1.1 million for MSC; $406,000 each for CSAV and Hamburg Sud; $378,000 for CCNI; $253,000 for ACL; and $249,000 for Evergreen.

Vaughn awarded $3,858,165.72, or about 94 percent of the damages claimed, after rejecting some smaller items like claimed labor costs for salaried employees, according to the opinion. He also overruled multiple objections from union attorneys.

Maryland Port Administration's White said he has had discussions with Mark Montgomery, president and CEO of Ports America Chesapeake, about the negotiations, but not specifically about the $1.1 million in damages that Ports America is owed or whether it would be willing to forgive the debt to help secure a new local contract.

Montgomery declined to comment through an aide.

The arbitrator Vaughn retained jurisdiction over the case for 180 days — or through the middle of this summer — but left it to the parties to determine how the award is paid or "agree to some other amount of damages."

Kevin J. Marrinan, an attorney for the ILA, said Vaughn may have thought the damages award would create an incentive for the various parties to work out their differences, but the issue instead "boomeranged" and become a major obstacle.

If the damages award remains unresolved when Vaughn's jurisdiction expires, Marrinan said, the dispute could continue in federal court.

USMX's Adam said the negotiations in Baltimore represent "a mine field" that all parties are trying to get through carefully, and resolving the damages award is just one part of that process.

"The ILA is our labor force in Baltimore. They've historically been a good labor force with a hiccup here and there. We have to move forward with the ILA in Baltimore," Adam said. "The last thing I want to do is create any ill will."

An earlier verison of the story included the incorrect tonnage of additional fuel that the CCNI Antofagasta used to stay on schedule after being delayed by the longshoremen’s strike.

krector@baltsun.com

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Damages requested and awarded

Damages for port of Baltimore strike, as requested by port operators and shipping lines and awarded by federal arbitrator M. David Vaughn

Ports America Chesapeake

Requested: $1,312,034.00

Awarded: $1,108,947.00

MSC

Requested: $1,103,815.83

Awarded: $1,104,116.00

Hamburg Sud

Requested: $406,323.00

Awarded: $406,323.00

CSAV

Requested: $406,025.00

Awarded: $404,025.00

CCNI

Requested: $378,341.85

Awarded: $360,341.85

ACL

Requested: $252,972.87

Awarded: $252,972.87

Evergreen

Requested: $249,423.45

Awarded: $221,440.00

Copyright © 2014, The Baltimore Sun
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