by Michael Hansen, Hawaii Shippers Council, December 29, 2015

American Shipper Magazine reported on December 29, 2015, in an article, “Unions file protest over crewing of APL ship,” a labor dispute over the manning of the U.S. Flag containership APL GUAM which is scheduled to provide regular liner service between Yokohama, Japan, Apra Harbor, Guam, and Saipan, Commonwealth of the Northern Mariana Islands (CNMI).

American President Lines Ltd. (APL) announced their new U.S. Flag service to the U.S. Territory of Guam in October 2015. The new APL service to Guam involves two parts: a weekly mainline Transpacific service known as Eagle Express (EX1) employing six U.S. Flag 5,100 TEU containerships; and, a fortnightly feeder service known as the Guam Saipan Express (GSX) employing the 1,100 TEU containership APL GUAM and connecting at Yokohama. All the ships involved are foreign built.

In activating their GSX service, APL transferred their U.S. Maritime Administration (MARAD) Maritime Security Program (MSP) subsidy allocation – commonly known as a “chit” – from the APL CYPRINE – a 5,020 TEU containership operating U.S. Flag in South East Asia to the APL GUAM and reflagged the APL CYPRINE to Singapore flag (which meant terminating the U.S. crew).

In addition, instead of retaining the crewing arrangements in place for the APL CYPRINE involving five different shipboard unions, APL chose to contract out the technical ship management to a company with existing labor contracts with only two shipboard unions.

While from the point of APL’s management, the reduction in the number of shipboard unions and elimination of the legacy union agreements is rational arrangement for the smaller APL GUAM (one-fifth the size of the APL CYPRINE) and probably means an appropriately smaller crew.

The five legacy unions lead by the International Organization of Masters, Mates and Pilots (IOMMP) also known as the MMP have filed a complaint with the U.S. National Labor Relations Board (NLRB) claiming that their legacy union agreements should follow the MARAD MSP allocation chit. The parties are awaiting the decision of the NLRB.

The recently enacted Bipartisan Budget Act of 2015 (H.R. 1314; P.L. 114-74) raised the annual MARAD MSP payment from 3.1 to 5.0 million per annum beginning in the federal Fiscal Year 2016 (October 1, 2015 – September 30, 2016).

American President Lines Ltd. (APL)

American President Lines Ltd. (APL) is the primary subsidiary of the Singapore-based Neptune Orient Line Limited (NOL) also known as the NOL Group. NOL was founded in 1968 as Singapore’s national shipping line wholly owned by the Government of Singapore. Today NOL is privately owned as serves as a holding company for APL, which is the 8th largest containership operator in the world. APL was once the prominent U.S. shipping company but was acquired in 1996 by NOL and is now a foreign shipping company. APL owns (through special trusts) operates several foreign-built U.S. flag containerships that allow them to compete for U.S. government preference cargo especially military preference cargoes.

The Guam Exemption (from the Jones Act)

Guam (along with Midway and Wake Islands) is exempt from the U.S. ship build and U.S. ship ownership requirements under a provision in the coastwise law commonly known as the “Guam Exemption.” Saipan is the seat of government, largest settlement and main port in the Commonwealth of the Northern Mariana Islands (CNMI), which was exempted from maritime cabotage by the international treaty that provided for its annexation by the U.S. Foreign owners are permitted to own U.S. flag ships operating in the foreign trade (as opposed to the domestic Jones Act trades).

Key excerpts:

Multiple labor groups are awaiting determinations from the National Labor Relations Board and an arbitrator on contract claims regarding a new APL service between Japan and Guam, according to Don Marcus, president of the Masters, Mates & Pilots union.

Don Marcus, the president of the Masters, Mates & Pilots union, said his union and others are awaiting determinations from the NLRB on an unfair labor practice and an arbitrator on contract claims having to do with the crewing of a ship in a new service APL is operating between Japan and Guam.

“APL is attempting to manipulate the Maritime Security Program in an effort to avoid their collective bargaining obligations with the unions that have been employed by APL since the start of the MSP program in 1997,” claimed Marcus.

“Without notice to the unions currently employed aboard their MSP vessels, and during amicable collective bargaining, APL secretly sought and received MARAD approval to transfer MSP agreement MA/MSP-54 from the 5,400-TEU container vessel M/V APL Cyprine to the 1,100-TEU container vessel APL Guam using another APL operator (and different labor unions)," he said. "This can only be explained as an effort to seek lower cost labor absent good faith bargaining.”

"On Nov. 3, APL Maritime Ltd. President & CEO Eric Mensing circulated an email notice to the MFOW, SUP, MEBA and MM&P affirming the planned reflagging and removal of the APL Cyprine from MSP and transfer of the MSP chit to the APL Guam," he added. "APL determined that it no longer had enough U.S. preference cargo to make continued operation of the APL Cyprine in the U.S.-flag Asia Subcontinent 1 (AS1) service commercially viable. The APL Guam is scheduled to be placed on the Guam-Saipan Express (GSX) service between Yokohama, Guam and Saipan."

October, 2015: American President Challenges Matson's Guam Monopoly