Looming port strike, government shutdown likely averted until December, on-base business boost, import duty-free restrictions, Lebanon phone attack implications, convention preview
ALA’s Larry Lapka reports.
With several pressing concerns needing to be addressed, the American Logistics Association held a webinar to focus on these matters on Sept. 24.
Among these issues which the webinar highlighted were the looming East Coast port strike, and a possible government shutdown, both of which could impact military resale and other on-base programs.
Hosted by ALA President Steve Rossetti, the session provided attendees with all they needed to know about these issues and others affecting their businesses.
PORT STRIKE
One of the ALA’s most pressing current concerns is the East Coast/Gulf Coast port strike, which is set for Oct. 1. This strike could greatly impact operations at these ports.
“It is the most critical issue we have now,” Rossetti said. “The Hampton Roads, Va., chapter of ALA had a meeting a couple of days ago where they discussed the port strikes, and right now, where we stand is that the strike is going to happen. There hasn’t been any significant movement on either side.
“Right now, it’s a negotiation between the International Longshoremen’s Association (ILA) and the Maritime Alliance.
“The issues are pay and automation. The union is going for what I believe is about a 70 percent to 80 percent increase in pay, plus restrictions on automation that they feel would displace workers.”
Rossetti noted that the strike would affect all East Coast ports, Gulf ports, “and right now, we don’t have any information that there would be sympathy strikes on the West Coast.”
Sharon Fleener, senior director in overseas service and regulations and who Rossetti described as “the export and port expert” at SpartanNash, provided attendees with her rundown of the potential work stoppage.
“We were fortunate enough to have a representative at the Defense Commissary Agency (DeCA) to actually talk about their perspective and what they are hearing about the potential ILA closure,” Fleener noted.
“The ports have made an announcement that the ILA has full intention of going ahead and engaging in their strike,” she said. “They have sent out a schedule that is in preparation of the strike.
“For the first time, the ports will be open all weekend, Saturday and Sunday, with Saturday being a full-schedule day, and Sunday as a half day, and into Monday, and the Port of Virginia will be closed on Tuesday.”
Fleener said that the Hampton Roads Chassis Pool II (HRCP2) Agreement company will not be charging, “that the billing will stop, which is important if you have a pool of empty chassis out, and if you are ready to go ahead once the strike is over. They have warned us that there will be some slowdowns, having a hard time getting empties which we have already experienced.
“All of the agencies have taken steps and measures to order as much product as possible to get in in lieu of the potential strike, which is a good thing because now it is happening, so right now, we are just pushing to get product in there before the deadline.
“The last ship that is sailing out of there, for Hapag Lloyd, is sailing on Sept. 30, and the last ship for Mersk is sailing out of there on Sept. 27.”
Fleener told attendees that the U.S. Transportation Command (USTRANSCOM) has put out a advisory that no more bookings would be accepted for Mersk and for Hapag Lloyd after Oct. 1, “so no one will be able to book any cargo on ocean carriers. They have not announced anything for any other carriers.
“We are prepared at the best, and we just hope that it does not last long.”
As far as Puerto Rico and Guantanamo, Fleener noted that currently, there are two carriers that are privately owned and they use other union personnel and not those of ILA, “so they are not participating in the strike.
“But there is no guarantee that they will be allowed passage. I know that the ocean carriers have reached out to the sheriff’s office to see if there is protection for them, but nothing is guaranteed, so those orders for Puerto Rico that were recently submitted, they have now been canceled, so I will be sending out notification, but Gitmo’s orders are still out there, they still are alive, but again, nothing is guaranteed.”
As for Europe, Fleener told attendees that the Netherlands sent a letter to the ILA along with the ports in Bermuda in full support and solidarity with the ILA, “so no one quite knows what is going to happen on that side.
“The ports in the Netherlands have been occasionally putting small strikes out there with union disputes and asking for things, but no one quite knows if they are going to join … but there is fear.”
Rossetti said that ALA has reached out to a number of governmental entities “to apprise them of the impact for our operations overseas,” including the Department of Labor, the Department of Transportation, Department of Commerce, Department of Agriculture, members of Congress, the White House National Economic Council, and the union and Maritime Alliance “telling them of the criticality to get a deal to keep the ports open.
“A number of other organizations in Washington have reached out to them to get some intervention to head off this strike.”
Rossetti said that it hasn’t yet worked. “Right now, no good,” he stated. “This thing continues to careen into a crisis.”
He added that Defense “has options, such as a disposal for airlift. The TRANSCOM people are advising that there are critical materials, war time munitions, things of that sort that take precedence ahead of our commodities.
“I know that the resale agencies are going to be working on workarounds, including other maritime options and some airlift options … this comes at a very critical time, it’s really a culmination of a lot of convulsions we’ve been experiencing, whether it is Red Sea or Panama or disruptions in the cadence of shipping associated with the pandemic.
“Just when we were smoothing out the pandemic, this strike issue came up.”
The ALA president added, “We don’t know how the other unions are going to behave, such as the West Coast union, whether they will have slowdowns or sympathy walkouts to support the East Coast and Gulf Coast ILA, but we are watching that very closely.
“We have a remarkable logistics team, all of our distributors, but in the resale agencies, I know all of them have been looking into the crystal ball to see how this might take place … they have been forward ordering front loading shipments so we can get as much inventory into theaters as possible ahead of this, so we have to commend all of the resale agencies and distributors for the work they have been doing to anticipate this and try to get as much through as they can.
“But you know, we’re shipping probably 300 containers a week if not more, and every week the strike takes place, it will take four to six weeks for things to flatten out afterwards.”
Rossetti noted that a decision to strike or not to strike needs to be made as soon as possible. “I think it is going to get very critical quickly as this thing approaches and if indeed it takes place, we’re going to hit critical mass very quickly — in fact, we already are hitting critical mass,” he stated.
“All we can do at this point work with policy makers in Washington to urge them to address this,” he said. “The resale agencies are taking extraordinary efforts to do workarounds to deal with this, but it is going to be a major issue, as it is going to affect the American economy, and all of these union negotiations get wrapped up in politics, and we don’t know how that may play out … .
“But needless to say, there are a number of tools that the government has to force the parties to go back to the bargaining table. The National Labor Relations Board (NLRB) has reached out, the Department of Labor has already reached out in some sectors to try to at least inflect that they may take action, but we don’t see anything concrete taking place as a result of that.”
The ALA president brought up the Taft-Hartley Act, “where the president can invoke special requirements to force people back to the bargaining table, but right now, we don’t see any of that taking place.
“We are going to be urging everybody that will listen to us here in town, along with a whole range of other organizations up and down the economy, to keep this open.”
GOVERNMENT SHUTDOWN
Rossetti told attendees that a deal appears to be in place to avert a government shutdown.
“There will be votes taking place today, tomorrow, the next day,” he said. “Right now, in order to suspend to rules in the House to get an appropriation or a continuing resolution, in this case, the current plan is to have it run until Dec. 20, which is past the election, and would give Congress time to get a more permanent bill into place.
“Right now, the process for getting a continuing resolution, they are going to suspend the rules, but it is going to have to be bipartisan, and they are going to have to have a two-thirds vote to ride the process.
“It looks like they have the votes to get there, and we have been in touch with the appropriators to see what exactly is taking place.”
Rossetti said that under a continuing resolution, “The government is funded at the prior year levels which are high, but Defense needs a means to get out of the continuing resolution, because there are about $50 billion to $70 billion that they will fall short of if they have to have it at a year-long continuing resolution instead of a regular order of appropriations bill, so it is very critical.
“If Defense is $50 billion to $70 billion short, that tumbles down on all of our operations, so we are actively working to support a full year regular funding bill because we don’t want to have any appropriations disruptions to take place or have any impact on some of our vital programs.”
The ALA president stated that a deal looks to be in place, but “hiccups can always happen,” and parties have stepped up to soften the load.
“Secretary of Defense Lloyd Austin and the Personnel and Readiness (P&R) team have stepped up to make sure that even in the event of a government shutdown, that at least commissary operations would continue to proceed,” Rossetti explained.
“The Department has made the decision to allow excess funds to be used, funds that are in reserve, to allow commissaries to run during a shutdown, and on any given day, it is 30 to 90 days worth of cash to allow commissaries to keep going,” he stated. “That was a major step by the administration and Secretary Austin, and the comptroller and P&R for making that decision, and allowing the commissaries to proceed.”
Rossetti said the military exchanges are “obliquely impacted by what we call ‘a lapse in appropriations,’ and since the exchanges are largely non-appropriated funded, “they continue to operate.”
ADDITIONAL TOPICS
With the ALA’s Annual Convention slated to take place in Cavalier Marriott, Virginia Beach, Va., on Oct, 15-17, the ALA president gave a brief preview of some of the current hot topics leading up to the three-day event.
Electronics
Rossetti said one of the topics to look at leading up to the convention is the pager issue in the Middle East
“Electronics have been hit, and what the effects are on the supply chain, how our government might be reacting to this … we already have restrictions on electronics, but this could result in more restrictions to take place,” he said.
Duty-Free Shipping
Another issue are the rules impacting companies shipping products into the U.S. without paying duty if the amount of the purchase is under $800, “so in other words, you can ship direct to consumers,” Rossetti explained.
“This allows various companies to bypass duty,” he continued. “The U.S. trade representative has announced that they are moving to end that practice, they are issuing a federal rule on it … it does not have a direct effect on our operations, but it will affect the ability for competitors to the exchange to ship things into the country direct to consumers duty free, and that will have an effect on operations, so we are watching that very closely.”
Initiative to Protect On-Base Commerce
Rossetti said that this initiative is being created “to tell policy makers all of the benefits of this program, and the direct effect that any restrictions or sanctions that are put on this program affects the troops.
“We want to make sure that policy makers understand that they are not affecting a government agency when they make restrictions or take actions, that it actually has an impact on the troops.”
The ALA president said that the organization will be inventorying all the positive programs, “putting together a package to let policy makers know about how this program takes care of people … this is the only program in government that actually takes expenditures by the troops and recycles it back into their own benefit, and this is a program that needs to be protected, if anything, it should be replicated in government, because it is an example of a public/private partnership that works, and we want to tell that story.”
Rossetti said there have been recent “convulsions” such as minimum wage increases and restrictions put on exchanges and commissaries selling products from China, “and we have been putting up with these threats to the system, and we want to remind policy makers that when they do things like this, it hurts the troops.”
Share of Wallet
“We want to increase the level of commerce taking place on military bases, we want to raise the level of revenue, because the more these programs are used, the more money is returned to the troops, more to community services and more to morale, welfare and recreation (MWR) programs,” Rossetti noted.
This effort includes the “lessening of friction” related to on-base access and “removing other friction in the shopping experience,” such as having a base-wide meal card, “a cornerstone for the food transformation effort.”
Election Day
And, of course, as the presidential election nears, that will be a topic of major discussion as Election Day, Nov. 5, approaches, both who wins the commander-in-chief spot and how Congress might change its composition.
“What will the effects be on resale programs going forward in either a Trump of Harris administration, or if the House or Senate change hands during the election?” Rossetti asked.
“There are a couple of key members of Congress who are in some very tough races, and we will speak about how these races will affect our outlook,” he said. “By the time of the convention, we will have had a little more time to see how things might shake out.”
