FMC REVIEWS CHASSIS, PER DIEM, DEMURRAGE

At the behest of several industry groups, the Federal Maritime Commission (FMC) is taking a more active roll in reviewing chassis inspection procedures as well as per diem and demurrage fees assessed during the negotiation-related work slowdowns. Initially, the FMC requested the ocean carriers provide information for analysis, however, the information has not been forthcoming. Now, the FMC is looking into issuing an order to demand the information.

FMC

CHASSIS AGREEMENT ON THE WATERFRONT

chassisAfter months of bickering across the table and in the press, the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) have announced they have reached a tentative agreement on the maintenance and repair of chassis. What the agreement entails remains a complete mystery.

Did the PMA grant the ILWU’s request to inspect, flag and repair chassis before leaving the marine terminals? Many in the industry think so. Similar language was part of the East Coast longshore labor contract and has led to corruption and payoffs to keep chassis moving.  Is that the type of operating environment we can expect moving forward?  We certainly hope not, but that’s what you get when folks who do not own the asset negotiate its maintenance and repair.  Trucking industry groups have said they are looking into legal action should these inspections take place.

The remaining topics up for negotiation are wages, pensions and the length of the contract.  It was widely presumed the contract would be reduced to three years this go around as a way of deferring the discussion on the Obamacare “Cadillac” tax set for collection in 2018.  As part of the Affordable Care Act, “Cadillac” healthcare plans are subject to a tax. In the case of the ILWU’s $0 premium participation, $0 co-pay and $1 for prescriptions, the tax would be $150M per year.  The ILWU does not want its members to absorb this tax and the PMA members cannot afford to do so.  Hence the presumption this subject was “kicked down the road” in hopes a new administration and new legislature may amend the law and tax structure.