State presses dock union for another try at accord

Largest auto carrier ties new cargo hub to eased work rules

Port of Baltimore

June 22, 2000|By Paul Adams | Paul Adams,SUN STAFF

The port of Baltimore's largest shipping line still holds out faint hope for an agreement with local Longshoremen that will pave the way for a new cargo hub in the city. But Wallenius Wilhelmsen said yesterday that it has no plans to present another proposal to the union, which rejected the company's request for work rules changes in a 235-189 vote Tuesday.

Maryland port officials are not giving up, saying they are discussing the possibility of another vote with union leadership. The union has rejected the contract addendum twice already, though the most recent vote failed by a slimmer margin.

"I asked them if we could put together another vote, if that's possible, and how quickly can we do it," said James J. White, executive director of the Maryland Port Administration.

Though the Scandinavian steamship line says it won't turn its back on Baltimore as a result of the vote, industry analysts say the Longshoremen are playing a potentially costly game of hardball with a company that has been scrambling to cut costs by consolidating its operations and trimming overhead.

At least two other ports have thrived since the world's largest auto carrier put down roots. But some members of Local 333 of the International Longshoremen's Association say they have been burned too many times in the past and a majority remains skeptical that more work will result from a deal with Wallenius Wilhelmsen Lines.

How the shipping line ultimately reacts to the union's power play could mean the difference between growth and stagnation for the port, some industry analysts say.

"This is not a friendly business," said Kevin Horn, a research professor with the Louisiana State University National Ports and Waterways Institute. "This is a shark-tank business and there are other [ports] who would go after this business real hard."

That includes ports like California's once sleepy Port Hueneme, between San Francisco and Los Angeles. The port attracted little attention until about 10 years ago, when it began aggressively courting deep-draft oceangoing carriers. Wallenius Wilhelmsen was among those that eventually took the bait, lured away from Los Angeles in part by a more favorable labor environment in Port Hueneme. Today, the port handles about 217,000 vehicles a year.

"They are our biggest customer with regard to revenue and the Longshoremen realize that. I would say one of the reasons they [Wallenius Wilhelmsen] came was because of the better labor situation," said Pete Wallace, director of operations for the California port.

The port of Brunswick, Ga., also benefited from Wallenius Wilhelmsen's consolidation effort. The port has seen its cargo volume grow 60 percent since 1995. The steamship line is credited with helping to speed that growth by establishing a hub there about two years ago. In the past year, its vessel calls to the port have increased 21 percent.

"There's just no question they've brought additional business," said David Schaller, executive director of the Georgia Port Authority.

The same could happen in Baltimore, says Chris Connor, executive vice president of Wallenius Wilhelmsen.

"We have shown the powers that be and leadership of the union that there is other cargo out there that we can take from other ports and bring to Baltimore," he said.

The seeds for the shipping line's conflict with Baltimore Longshoremen were sown almost 10 years ago, when recession and sluggish car sales left auto manufacturers and shipping lines alike with excess capacity and shrinking business. When the booming economy sent sales soaring again in the mid- to late 1990s, newly flush carmakers started buying up weakened competitors and sending more manufacturing business overseas.

Suddenly, steamship lines found themselves struggling to keep up with demand for transport, and competition for lucrative contracts intensified. As carmakers got bigger, their ability to dictate terms to shippers also grew, Horn said.

Seeking an edge, Wallenius Wilhelmsen followed the industry trend in cutting costs, squeezing every penny out of vessel operations and paring administrative expenses.

The last frontier in the budget battle lies in reducing port costs, says Horn. One way to do that is to consolidate operations at hub ports, allowing carriers to take advantage of economies of scale.

But labor costs are also a major part of the equation. Shipping lines are pushing unions to loosen work rules to allow for more flexibility. That can sometimes be a tough sell to rank-and-file workers when the economy is thriving and labor is tight.

"The business goes to the low-cost guy," Horn said. "They scramble to control pennies, because that's their profit margin."

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