by Michael N Hansen, President, Hawaii Shippers Council

Bloomberg Business Week recently published a good explanation of the question at the heart of the International Longshore and Warehouse Union (ILWU)/Pacific Maritime Association (PMA) negotiations for the West Coast contract: Which party – employees or employer --  is going to pay the 40% Obamacare excise tax on so-called Cadillac healthcare plans enjoyed by the ILWU rank and file?

Once the West Coast agreement is completed between the ILWU and the employers represented by the PMA, then the Hawaii and Alaska agreements have to be negotiated locally.  Historically the Hawaii and Alaska negotiations have followed the format of the West Coast contract.

Potentially, consumers in Hawaii and Alaska could pick up the tab for Obamacare excise tax at both ends of the domestic shipping voyages in their respective trades.

As the article states, the US West Coast (USWC) terminal operators are facing new competition from Canada (primarily Prince Rupert) and Mexico (Manzanillo and Lazaro Cardenas) where double stack rail service is available to the U.S. Midwest bypassing the USWC and offering lower cargo handling costs and shorter land transits.

Also, the Panama Canal Expansion Project when completed (now early 2016) will allow containerships up to 12,000 teus to transit.   This will make it more economical to move cargo, which was once discharged at USWC ports and moved by rail to the U.S. Midwest and USEC, through U.S. Gulf and USEC ports again bypassing USWC ports.

This new competition is going to put a ceiling on what the USWC terminal operators as represented by the PMA will be willing to pay for employee healthcare taxes, and the ILWU has maintained a position throughout the negotiations that their members will not pay the tax.

This could potentially lead to a stalemate and either a walkout or a lockout as occurred in 2002.

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Bloomberg: U.S. West Coast Port Pay Talks Hinge on Health-Care Costs