January 2013 Port Bureau News

Greater Houston 2013

J a n ua r y

Port Bureau

CBP: Targeting

Point/Counterpoint

Spotlight

The Taft-Hartley Act

How does US Customs & Border Protection Target Your Shipment?

The ILA and USMX and Current Negotiations

on Patrick Studdert, President & CEO Buffalo Marine Service

The controversial 1947 amendment to the National Labor Relations Act

M E M B E R D R I V E N - M A R I T I M E B A S E D - V A Port LUE ADD E D/ S E R V 2013 I C E S1 Bureau News January

Captain’s Corner CAPT Bill Diehl, USCG (Ret.), P.E.

The Port of Houston - An Outlier?

New Years is for many, a time for reflection. I’ve been doing some of that myself since receiving the book Outliers from my brother Bert for Christmas. Malcolm Galdwell, the author, studies the very successful –the Outliers of our society—and makes the point that intelligence has less to do with success than where, when, and how you were raised. Galdwell makes his point by peeling back what the extremely successful all have in common. It is a fascinating book and has triggered my reflection on my upbringing.

I grew up one of nine children in upstate New York in the little town of Olean with five brothers and three sisters. The boys were split into two rooms: the big guys and the little guys. Johnny and Thomas (the older two) shared a room with my youngest brother David. Jimbo, Bert and I shared the little guys’ room while my sisters (Mary, Kathy and Abu) had a separate life in the attic room.

My brothers in the big guy room all went into the Army,

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Port Bureau News

the little guys all went to academies (AF & CG) and my sisters all went to Saint Bonaventure University. So the question is: had my parents placed me in the big guy room would the gravitational forces of that room pulled me into the Army? I don’t know, but I could peal back my entire life and make Galdwell’s case of how my family (including ancestry), neighborhood and time I grew up influenced me.

Moving on to the Port, in recent months, COL Len Waterworth has done a great job of emphasizing history as he speaks to the community, discussing the 1900 hurricane, oil discovery at Spindletop, and a community (for the first time) willing to cost share with the government the digging of a major ship channel. These all led to Houston becoming a global energy capital and fourth largest US city. Had not the need to build inland refineries coincided with a city hungry to engage in global trade would the channel ever have been completed? Furthermore without a ship channel would there be a city of Houston?

Longshoremen Vital to an efficient port, longshoremen load , unload and perform a number of other duties to the cargo coming across our docks.

Houston’s positive relations with union and non-union labor alike keep us an outlier: strong, efficient, and focused on commerce.

It is fun to mull over theories of what ifs about the past, but the Colonel is right: you have to know where you have been (as a port family) as you set the course for the future. The City of Houston has succeeded because of the Port, and now the City provides the Port great advantages by having a large, diverse, well-educated population that needs access to global logistic chains. But if we are to pass our global port advantages on to future generations we have some challenges we need to address: we have a channel that is being under maintained; we have looming gaps in our skilled workforce when it comes to tradesmen; and we have no national or state maritime strategy to politically support us and ensure future development.

I look forward to working with you in 2013 on these challenges, and wish all in the port family good health and prosperity in 2013.

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Mayan Mischief, Fiscal Brinkmanship and Labor Pains Port Watch - Tom Marian, Buffalo Marine Service November’s vessel arrivals were off throughout Texas ports. It could have been all of the looming December madness as doomsayers fixated on a 1300 year old piece of stone; politicians grappled with a fiscal mess in Washington; and unions that rely on the waterfront posturing over future benefits. Alas, all has been averted – for now - and it appears the status quo reins on the consumption front as the November “taper” resulted in a somewhat predictable 2.5% monthly drop. It is worth noting that this was the first substantive decline for the region since the tail end of the 2nd quarter.

There were two monthly bright spots for the Lone Star State – Sabine and Brownsville. As previously mentioned, the port that anchors the border has been enjoying a very robust trade tear thanks to shale-gas exploration. It jumped 25% since October and is up over 18% for the year.

At the opposite end of the coast, Sabine had one of its best monthly vessel tallies with a 5% rise which edged it up nearly 2% for the year. Unfortunately, there end the gains. Freeport continues to wane with 21% fewer vessels. This all but guarantees it earning the dubious distinction of 4

Port Bureau News

the port experiencing the biggest year-todate drop, while just next door Galveston saw a slight monthly decrease, and it is still well entrenched in negative territory for the year by almost 7%. Further to the south, Corpus Christi netted over 6% fewer vessel arrivals for the month; however, like Brownsville, it is enjoying a solid year due to shale-gas activity as reflected in an 11% year-to-date- improvement.

Closer to home, Houston and Texas City remain in black on an annualized basis. Yet, they were also part of the string of vessel arrival declines over the last month at a mere .4% and much larger 9.7% respectively. The silver lining for both ports is that they are up for the year albeit Texas

City cannot afford another monthly decline if it hopes to remain so with its current paltry .3% year-to-date gain.

Houston isn’t setting the world on fire but its 3.5% improvement over last year is well above the nation’s GDP growth. Last but never least, tows trekking across the Houston Ship Channel are up by nearly 5% for the year. Again, another reflection of the strong inland trade picture associated with the shale-gas production. Granted, the monthly change was off by 2% but all indications are that brownwater will continue to benefit from the largesse of the shale-gas plays.

It is interesting to note, that despite Houston’s slight monthly decline, all but two of the vessel types for the port saw increases. Not surprisingly, tankers continued to slump vis-à-vis last year – down over 19% - and were off by 12% over the last month. While bulk cargo vessels realized a monthly drop of nearly 8%, they are still up over 3% for the year.

Car carriers continue to enjoy a banner year as two more entered the port in November adding to the year-todate tally improvement of 34%. Given the reality that one cannot have cars without chemicals, the port saw 14% more chemical tankers over the last month and remains nearly 80% above last year’s pace. Rounding out the remaining categories for the month, Container vessels were up by about 4%; General Cargo repeated its October performance; LPG eked out another 2% monthly gain; and one more RO/RO vessel called upon Houston for the month. All of these categories with the exception of Container ves-

sels have seen healthy monthly gains.

So where does this leave us for the year’s final month? The conquering of December’s woes, at least for the time being, seems to indicate that the 2012 will have a solid finish which will slightly outpace nationwide ves-

sel and trade trends. Thus, so long as global demand for the fruits of fracking exists, things should be on track for another year of modest gains as we head into the year that the Mayans thought would never dawn. -T. Marian, Buffalo Marine Service, Inc.

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Patrick J. Studdert Since its inception in 1935, Buffalo Marine has grown into the nation’s most prestigious barge/bunker company with a fleet of over 40 vessels. Buffalo posesses a constant committment to customer service and maintains one of the newest and most environmentally friendly fleets available today.

President & CEO - Buffalo Marine Service, Inc.

“

The key word for me is enthusiasm. That’s it. That’s what does it.” Patrick J. Studdert, President and CEO of Buffalo Marine Service, Inc. certainly has enthusiasm for his chosen career and it’s a contagious energy exhibited by the team around him.

In his nearly four decades with Buffalo Marine, Pat’s enthusiasm has not come close to waning as he exhorts the talents, professionalism and experience of his team at Buffalo. “Whether it’s thirty years ago when the only people in Houston selling oil on the channel were Texaco, Gulf Oil and Shell or now when we have hundreds of docks and over a dozen different suppliers – you need to know when you pick up the phone and call us, we’re gonna’ get the job done, and get it done right.”

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Port Bureau News

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orn and raised in Houston, TX, and the son of the late Thomas and Estelle Studdert, when Pat graduated from San Jacinto High School in 1965 he’d already spent time on the waterfront. His father Tom started taking him down to the tank barges as a six year old to do gopher work, and during high school. “I was here parttime working with my dad in high school – but I’d been on ships with him since I was six. He’d take me down when he’d board ships and deal with payroll and all the other things that happened.”

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fter earning a track scholarship (high hurdles, intermediate hurdles, quarter mile relay) to the University of Houston where he got his Bachelor’s degree in Education,

Pat began teaching and coaching athletics at Sharpstown Jr/ Sr High School in 1969. “You know we were the first Jr/Sr high ever to run the wishbone offense”, Pat said, referring to a formation that can eliminate two defenders without blocking them by forcing them to choose from a crowded backfield which can include two running backs and a fullback. “We had Darrell Royal, Emory Bellard, and Willie Zapalac come down and teach us and that sucker was unstoppable.”

With his success at Sharpstown, Coach Studdert moved across town to Waltrip High School on the north side to work as an of-

fensive coordinator. But even while working at the schools and getting his Master’s degree in Education from Texas Southern University, Coach Studdert spent time working at Buffalo. “Those years I was coaching, I’d come down here on Sundays and help out, do what needed to be done.”

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n 1976, Pat started working at Buffalo for good, and his father, Thomas – who’d started the company at the Cotton Exchange Building downtown in 1938 – was running the show.

“

When I came here full time, I was in charge of tug & barge maintenance – we did Coast Guard inspections, scheduled the shipyards, oversaw repairs, whatever the case may have been at the time.”

H

is father worked at the company for several more years, but upon the elder Studdert’s death in 1980, Pat assumed the mantle of leadership. His mother maintained a majority stake in the company until her death in 1996, but in the over 30 years since taking the reins, Pat has grown Buffalo to the largest bunker fuel supplier in the busiest port in the United States.

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ith a commitment to customer service and the drive to innovate and stay abreast of technological developments, Pat explains how Buffalo has grown: “When I started, it was VHF radios and pay phones – I knew every pay phone not only on the docks, but in every roadside stop from here to where we were living at the time in La Porte.” From two tugs and four barges with no boom system when he started, Buffalo’s fleet now includes 17 tugs and 30 barges. “Used to be we’d come up alongside and have to use a hose on a block-and-tackle setup just to get a connection. Now we can very carefully swing that boom over and it’s not only faster, it’s safer both for our crews and the environment.” Under Pat’s leadership and direc-

tion, Buffalo has expanded the services offered in the Port of Houston: “Before we started it, there was no bunkering down there at Boliver - first barge we pushed out there, ships were calling us on the radio asking if we were going the wrong way. But we pushed through and proved it could be done safely and efficiently - delivering that service that our customers expect of us.”

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n a recent article about Buffalo, engine manufacturer Cummins noted

“

In the immaculate offices, a minimum of shore side staff, concentrate on keeping the fleet and the business running efficiently. The dispatch office has all the latest electronics for tracking the vessels over the area that the company covers with video monitors refreshing the location every few seconds. A list of vessels shows who is crewing each one and beside each vessel name a logo identifies the company’s smoking-free vessels that now encompasses half the fleet. In the crew training room where 1/3 of the fleet personal sits down each Tuesday morning for a coaching and training session there is another sign on the wall. This one shows annual cost of smoking two packs of cigarettes per day and then adds to that the $5.00 per day bonus that the company pays each crewmember of a non-smoking boat. The $4463.50 potential savings are moving more crews to smoke free all the time. The challenge for the company is that once a 100% participation is achieved the daily bonus will double to $10.00.”

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n addition to his work at Buffalo, Pat is active in the community.

Over the past four decades he has been active in the Texas Waterways Operators Association, Houston Propeller Club, La

Porte Independent School District as a prior President of the Board of Trustees, Houston International Seafarer’s Center Board of Directors as a prior President, Barbours Cut International Seafarer’s Center Board of Directors and a host of other civic organizations. “It keeps the job fun, it keeps you young. When I ran for school board, I just said Vote for Pat: Enthusiasm for Education. I got 98% of the vote.”

P

at has two sons including Tim who works at Buffalo as the VP of Operations and recently started his own company, Shamrock Marine, LLC, and Tom who is the Dean of Student Orientation at the University of Southern California where he will earn his doctorate in May. Pat is recently engaged to Ms. Cindy Folsom – who puts a smile to the Coach’s eye when he talks about her, and Patrick is still an avid football fan with a presence at Reliant Stadium since the Texans’ inaugural season in 2001. He works out five days a week – still jumping hurdles – and runs full speed taking care of Buffalo Marine, his employees and his customers.

Asked about retirement plans, Pat stops: “You’ve gotta’ be kidding - next stop for me is Forest Park (Cemetery). I feel great, I love what I do, and I’m gonna’ be doing that until they box me up - that’s all there is to it.”

When I ran for school board, I just said Vote for Pat: Enthusiasm for Education. I got 98% of the Vote Port Bureau News / January 2013

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CBP

Inspection & Interdiction Over 1/3rd of the United States’ economy is tied to global trade – how does that cargo reach our shores? Put simply, with over 98% of the tonnage, our nation’s foreign trade comes in by ship. In addition, our nation’s exports leave for their overseas destinations by ship. With cargo of all shapes, sizes and types, the shipping industry was revolutionized on April 26th, 1956 when the Ideal X sailed from Newark, NJ to Houston, TX with 58 containers aboard.

Since that maiden voyage, the shipping container has become a ubiquitous symbol of commerce and in 2011, over 13.4 million containers arrived at American ports.

Over two centuries ago, responding to the fiscal challenges brought on by the American Revolution, President Washington signed

the Tariff Act of July 4, 1789 which authorized the collection of duties – taxes – on imported goods. Soon thereafter, Congress established the US Customs Service, an agency detailed to collect import tariffs and protect the economy from smuggled and illegal goods. For nearly 125 years – until the passage of the 16th amendment and institution of income tax– the US Customs Service was the largest source of revenue for the government and responsible for the development of US infrastructure and growth.

In 2003 with the creation and organization of the Department of Homeland Security, the Customs Service was combined with Immigration and Naturalization, the Border Patrol, and Animal & Plant Health Inspection Service to become a new

P. Seeba, GHPB agency: Customs and Border Protection. The new agency is responsible for “keeping terrorists and their weapons out of the United States, securing the border, facilitating international trade and travel, collecting duties, and enforcing US laws and regulations pertaining to immigration and illicit drugs, among other things”, and among their charges is the responsibility for reducing vulnerabilities associated with the supply chain of goods flowing in and out of the country by balancing security with the free flow of commerce. To achieve this goal, CBP uses several programs that identify shipments that models project are at high risk of containing contraband, working with governments at the

Automated Targeting System ATS is an intranet-based enforcement and decision support system that compares traveler, cargo, and conveyance information against intelligence and other enforcement data by incorporating risk-based targeting scenarios and assessments. ATS assigns a risk score to arriving cargo shipments based on shipping information to help CBP identify and prevent potential terrorists and terrorist weapons from entering the United States.

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nide d ve ter pro or im imp ry of ata r fo The unt o d e. ts . en rism as co de tw r rul m e o h rovi hou l r e er uc ata for t ts, s to p e 24 d n red th e k e s d i i y m ri rov a ele equ d b o p pose ata r is r uire t rs y g d rrie t req rrie ma in ca that hipp el ca s, no l sse ts 10 s vess plan ve en e nd hipm with le th stow a rs d s CBP whi nd e t sa or ize g g, ule es imp tainer pplyinloadinessage R 2 n u ir 10+ requn of cole for s rior totatus m P io p b B C cat nsi urs ner s tifi espo 4 ho ntai 2 is r gin, ts, co ori men ele

o arg t c .S.i sm e U ion t ran or ry t s bef orma info . l l a ur inf t c s t i ns n o fe tro 24 h . The ani ipme c t e m el tem por go o sh r to rs t Sys reign e ca carg e i r s fo . Th ing r e a f c ani t a res riv el r a ess ed M ssel k sco all a v t s e ris for a v e r of rs ui tom o a ule r R lly reqP’s Au d ont lationl carrie u o B ra H e de cu 24 P genets to C is loa its cal y vess s o b CB nife carg TS in ted ma und by A bmit bo sed is su is u tion ma

g n ti

e g r a T

Port Bureau News / January 2013

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ATS is the cornerstone of CBP’s targeting efforts that underlie the other programs that constitute the agency’s security strategy for maritime cargo containers. CBP targeters use ATS in the targeting process to help them determine whether to take further security actions, such as holding the shipment for examination, for cargo shipments they are reviewing. ATS consolidates data from various sources to create a single, comprehensive record for each U.S.-bound shipment. For example, carriers and importers provide data in compliance with the 24-hour rule and the 10+2 rule through other CBP systems, and these systems automatically feed the data into ATS. Through ATS, CBP also determines which shipments may be scanned overseas as part of the Container Security Initiative in an effort to prevent potentially dangerous cargo from being loaded onto U.S.-bound vessels.

Additionally, the system allows CBP to reduce the likelihood of examinations for members of the Customs-Trade Partnership Against Terrorism - a program through which CBP provides facilitated processing, such as reduced likelihood of security-based examinations, for members that implement the program’s minimum security criteria or guidelines and best practices.

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Port Bureau News

point of loading to examine US bound shipments, and performing additional inspections once cargo arrives in the United States. A recent Government Accountability Office (GAO) report on the effectiveness of CBP’s efforts notes that while “CBP officials believe that the likelihood of terrorists smuggling weapons of mass destruction (WMD) into the United States in cargo containers is relatively low… the consequences of such an event could be catastrophic.” It is with this mission, the agency is dedicated to ensuring that smugglers are not successful in using cargo containers to smuggle weapons, personnel, or illicit substances such as drugs and explosives.

Regulatory Assistance: Recent History

In the decade since the formation of the Department of Homeland Security, Congress has granted powers and responsibilities to CBP (and other DHS entities such as the United States Coast Guard) through a series of legislative acts including the Maritime Transportation Security Act of 2002 (MTSA), the 2006 Security and Accountability for Every Port (SAFE Port) Act, and others. These laws have established duties for maritime operators to comply with and tasked CBP with enforcement. Following MTSA and the establishment of a program to evaluate and certify secure international intermodal transportation system, facilities and carriers had to work handin-glove to show that they met stringent security requirements.

With the SAFE Port Act, pilot projects started at three foreign ports to test whether or not 100% of containers bound for the US could be scanned before they were brought on board ship.

Soon, Congress passed follow-up legislation that stated that 100% of all US-bound containers should be scanned at foreign ports prior to their loading by July 2012. The legis-

lation noted that scans should use both radiation detection equipment as well as non-intrusive inspection equipment, through which shielding material can be identified. By May 2012, DHS extended the deadline for 100% scanning to July 2014.

By January 2013, CBP has not met its goals for 100% scanning; according to government reports:

Due 48 Hours in Advance of Loading

10+2

From the Importer of Record 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Manufacturer (or supplier) name and address Seller (or owner) name and address Buyer (or owner) name and address Ship-to name and address Container stuffing location Consolidator (stuffer) name and address Importer of record number/foreign trade zone applicant identification number Consignee number(s) Country of origin Commodity Harmonized Tariff Schedule number

“DHS stated that it recognizes the need to proceed with From the Importer of Record container security programs in a 1.

Vessel Stowage Plan manner that maximizes the secu- 2.

Container Status Messages rity of maritime cargo and faciliHow does CBP Determine tates its movement and reported that it plans to continue working with other What Shipments to Examine? federal agencies and international partners CBP’s Automated Targeting System (ATS) to develop technology and enhance risk manis an intranet-based decision support sysagement processes, in addition to continuing tem that compares intelligence and law enexisting programs that enhance cargo security. However, given that the feasibility of 100 forcement records with reported traveller percent scanning remains in doubt and DHS and transportation information for each shipand CBP have not identified alternatives that ment. 24 hours before a shipment is loaded could achieve the same goals as 100 per- to a vessel bound for the United States at a cent scanning, uncertainty persists regard- foreign port, cargo manifests, prepared by the ing the scope of DHS’s and CBP’s existing ocean carrier, must be electronically submitcontainer security programs and how these ted to CBP. These documents include bills programs will collectively affect the move- of lading for each shipment and a descripment of goods between trading partners.” tion of the goods, voyage, and “conditions of transportation”. In addition, as of January 2009, all shipments must file cargo information with CBP under a rule called Importer Security Filing, or “10+2”. Under this rule, the importer faces a $5,000 fine for non-compliance as well as additional screening and delay from CBP. In addition, CBP’s Container Security Initiative stations officers and staff at some participating foreign ports to target and scan containers at their point of loading.

Who is exempt from 100% Scanning Requirements?

The Act’s scanning provision includes possible extensions for containers loaded at a port or ports for which DHS certifies that at least two out of a list of specific conditions exist including:

(1) (2) (3)

Adequate scanning equipment not available/cannot be integrated with existing systems Port does not have the physical characteristics to install the equipment, or Use of the equipment will significantly affect trade capacity and the flow of cargo

Port Bureau News / January 2013

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geted shipment is packed into a container with other shipments, CBP may examine the entire container.

For containerized shipments, a single shipment may consist of one or more containers, or multiple shipments may be consolidated into a single container for transport.

Because ATS collects and presents data on shipments, CBP

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Port Bureau News

targets shipments—rather than individual containers— for examination. For a shipment that includes multiple containers, CBP may select some containers to examine or may examine all the containers in the shipment. If a tar-

With a baseline screening completed through the automated system, Border Protection Officers in the United States known as targeters make a determination about which shipments should be held for additional examination. This risk-based approach allows CBP to utilize their limited resources most effectively by flagging highrisk shipments while allowing cargo deemed likely safe to pass without impediment.

The ATS uses a weight set to determine whether a shipment should be classified as low, medium or high risk.

Some rules in the weight set determine if any of the supply chain parties have possible matches to known terrorists or previous violations of U.S. law, and other rules in the weight set evaluate the completeness of the data, for example, whether addresses are provided as required for supply chain par-

ties listed in the data, such as the importer. The weight set includes both strategic and tactical rules, so at the most basic level, shipments with connections to known or suspected terrorists as well as those that include invalid information are more likely to be classified as high risk, and shipments from trusted shippers who participate in CBP’s Customs-Trade Partnership Against Terrorism (C-TPAT) are more likely to be classified as low risk.

What do the Targeters have to say about

ATS?

ATS was first introduced in 1999 and is the primary system used to review shipments for examination. Targeters at six units were asked in mid-2012 for their opinion on the system and not-

ed that the system allows them to “better focus their targeting efforts” and that “the risk scores are helpful in balancing targeting workload.” More importantly, the targeters explained that the risk score was not the sole factor in determining whether or not a shipment is scheduled for examination.

Instead, the officers use the ATS score as a starting point before the actual shipment data is reviewed.

Upon review, targeters use other sources such as public records, overseas examination results, and additional research to base their actions upon before engaging in Port Bureau News / January 2013

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efforts that can range from clearance to the more drastic “do-notload” order which has to be issued from the National Targeting Center – Cargo (NTC-C).

The ATS system has features which allow targeters to annotate shipments so that other centers and future reviewers can build upon previous research, and entries in the ATS system allow officers to see if the shipment has been previously reviewed by other ATUs, NTC-C, or ports covered under the Container Security Initiative.

CBP targeters also use tools outside of ATS to conduct research. Targeters explained that they use web-based and other research tools to aid in their assessments of shipments. Such tools include web searches, which targeters use to find general information on a company or address; a third-party database of public and proprietary records, which targeters use to research business names and associated information such as a business’s locations, officers, and assets (e.g., registered vehicles); and the State Department’s Consular Consolidated Database, which targeters may use to obtain visa and passport information for foreign individuals involved in a shipment. Targeters review and analyze all of the information collected to make a decision as to whether a shipment should be examined. On the basis of such research and analysis, a targeter could select a low-risk shipment for examination. A targeter could also determine that an examination is not necessary for a medium-risk shipment—for example, the weight set may assign a medium-risk score to a shipment based on the data available, but the targeter could determine through research that the score is based on a clerical error in the data provided.

Targeters’ experience may also inform target14

Port Bureau News

ing decisions. For example, targeters at ATUs may have information about recent seizures and can look for recurring patterns to identify future shipments that may be part of a trend of illegal shipments.

CBP’s process for updating the ATS weighting scale involves assessing the impact of alternative versions of the weight set. For example, for the most recent update to the weight set, CBP’s impact assessment provides information on how many shipments would be assessed as high risk under each alternative version of the weight set and would affect CBP targeters’ workload at ports of arrival because such CBP policy ensures that all high-risk shipments are to be held for examination through the use of NII equipment, or physical scan. CBP officials stated that they believed the impact assessment that CBP conducted during the update process indicates the reasons for selecting the chosen version of the weight set. In short, CBP took a pragmatic approach by ensuring that reworking the ATS weight set would not so overburden the system that inspections and processing ground to a halt and shippers were caught in unreasonable delays.

The Bottom Line United States Customs and Border Protection straddles a difficult divide between ensuring security, stopping smuggling, protecting our national borders against those who would threaten them, and ensuring the free flow of commerce. When CBP stumbles or fails, its failures are often public and open for widespread criticism, while successes are often small, cumulative and unsung. At the same time, the institution is often seen as a threat or burden to those shippers, carriers, importers and operators who want nothing more than a smooth, uninterrupted cargo movement process. By understanding the mandates and processes undertaken by CBP, maritime companies can better adjust their processes to account for the protective actions of officers and staff who work tirelessly for little reward to provide enhanced safety and security for our industry and our communities.

national Targeting

Center - Cargo (NTC-C) In contrast to targeters at Container Security Initiative ports and Advance Targeting Units (ATUs), who focus their reviews on those shipments that are transiting from or to their respective ports, targeters at NTC-C review shipments for security risks from a national perspective. For example, if there is specific intelligence regarding an attempt to smuggle a terrorist weapon in a container, NTC-C targeters can use ATS to identify whether any shipments destined for the United States match the intelligence information, regardless of the port of arrival. NTC-C targeters also serve as a resource for other CBP targeters stationed at foreign and domestic ports because targeters at NTC-C may have access to research tools, such as classified databases, that may not be available to CBP targeters at these other locations.

Port Bureau News / January 2013

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Port Bureau Member Update:

Jerry Nagel, Rickmers Linie (America)

The Maritime Industry has lost one of its most respected, passionate and outstanding colleagues . Gerard (Jerry) Nagel passed away on December 19th, at Methodist Hospital in Houston,Texas. He was 64 years old. Rickmers-Linie (America) Inc , where Jerry served as President and CEO from 2004 to 2011 , and Chairman of the Board until mid 2012, released a statement about his passing : “With Jerry Nagel we are losing a truly outstanding colleague and friend.

Jerry to a large part formed the image of our company in the United States”. Coming up through the ranks Jerry left his mark every step of the way. He had many achievements throughout his impactful career. In 2011 he was awarded the Breakbulk Lifetime Achievement Award and in 2012 the Greater Houston Port Bureau recognized Jerry Nagel as Maritime Person of the Year.

It has been said that Jerry had two great passions outside of family and the maritime industry, and those were maritime education and the Houston Maritime Museum. Jerry found the most fulfilling experiences in life were those where he was doing, creating and building. That’s when you saw him at his best. His credo was “say what you can do, then do what you say”.

COL John Kennedy, USA (Ret.) Appointed to PHA Commission On December 18, 2012 Harris County Commissioner’s Court unanimously voted to appoint COL John D. Kennedy, USA (Ret.) to the Port of Houston Authority Commission. COL Kennedy fills a seat left vacant by the departure on 14 December of Elyse Lanier who stated that she was leaving to spend more time with family.

Speaking to Jim Guidry of the Guidry News, COL Kennedy noted that he was “really appreciative of the fact that the commissioners appointed me to the position that I think fits very well with a lot of my military background in transportation and logistics.”

In addition to his over 25 years of military service, COL Kennedy was City Manager of Nassau Bay and has advised the Bay Area Houston Economic Partnership, the Texas Municipal League, and the Bay Area Transportation Partnership.

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Port Bureau News

BARGING AHEAD ever so politely.

B

Buffalo Marine Service, Inc.

www.BuffaloMarine.com

Port Bureau News / January 2013

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An Update from the Lone Star Harbor Safety Committee:

Check out the new HSC website at: www.lonestarhsc.org

With a full year under its belt, the home-grown Lone Star Harbor Safety Committee has already begun keeping vessel operators, terminals, tenants, agents and other interested parties abreast of policy changes, best practices, and upcoming challenges along our waterways.

With its 2012 meetings on 17 FEB, 18 MAY, 10 AUG, and 9 NOV, the Harbor Safety Committee and its associated subcomittees tackled questions such as support for the Port of Houston Authority’s upcoming Bayport dredging project, AIS reporting requirements by tug/tows, internships for upcoming graduates of the Maritime High Schools, necessary maintenance dredging along docks, berths and slips, and other important issues that affect the day-to-day operations of maritime companies in the Houston/Galveston/TX City/Freeport port complexes.

As 2013 begins, join with Chairman Tom Marian, subcommittee chairs Jim Andrews, Mark Coyle, David Foret, and Tammy Lobaugh, and the rest of the Committee in discussing issues that you feel need to be addressed so that commerce may continue through our region.

The Lone Star Harbor Safety Committee is also soliciting for open positions representing the Commercial Fishing Vessels, Non-Liquid Terminal Operators, and Passenger Vessels. If you are interested, please contact Secretary Kristofer Schroder at Kristofer.Schroder@schrodermarine.net.

Upcoming Meeting Dates Training & Outreach:

1100 - 15 January - WMGA

Waterways Utilization:

1130 - 17 January - WGMA

Navigaton/Operations:

0900 - 29 January - ACTion Group

Dredging/Marine Construction:

1030 - 29 January - ACTion Group

Full Committee:

1000 - 8 February - Houston Pilots Port Bureau News / January 2013

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A Worker’s Point of View The International Longshoremen’s Association explains its point of view in regards to ongoing negotiations with the United States Maritime Alliance (USMX).

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THE ISSUE:

CONTAINER ROYALTIES International Longshoremen’s Association, AFL-CIO wants to maintain Container Royalty Fund as it is in current contract. USMX, the employer group representing ILA employers, wants to put a cash ceiling or CAP on how much money is put into the Container Royalty Fund for current longshore workers and ultimately, eliminate the Container Royalty Fund.

The first container royalties were established in the 1960s as a way to protect members of the International Longshoremen’s Association, AFL-CIO (ILA) in New York from job losses created by containerization and its introduction of automated cargo.

Container Royalty came about from negotiations and sacrifices made by ILA members since the late 1960s. Container Royalty supplements the members’ income and keeps his benefits package financially strong. Container Royalty eligibility must be earned by an ILA member reaching a certain amount of hours worked each year. ILA work isn’t like other professions: no ships mean no work, but employers depend on a strong and skilled

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workforce when ships need to be worked. Container Royalty helps keep an ILA workforce available.

When containerization started the ILA was faced with a huge displacement of worker whose jobs were eliminated by the ominous steel boxes. The ILA was at a crossroad - allow containerization to be implemented or refuse. The ILA agreed to allow containerization to flourish but negotiated a fee based on the weight of each loaded container to be used for annual payments to the longshore workers whose job opportunities had been compromised due to containerization. As the number of containers being handled increased, the negotiated payment for each worker increased. Rather than being an annual bonus for each worker, as USMX suggests, this payment is compensation for the job opportunities lost by permitting containerization.

United States Maritime Alliance now wants to limit the amount of money that is paid ILA members and goes into various Container Royalty Funds by placing a CAP on the money collected in any given contract year. Container Royalty is collected by the amount of tons of containerized cargo ILA members handle.

A total of $4.85 is collected on each ton of containerized cargo

handled and is distributed to ILA workers as part of a Wage supplement and to the ILA members’ health care fund, called MILA. USMX ultimate goal is to eliminate Container Royalty, based on their last proposal to end it in 25 years.

ILA has suggested a way for Container Royalty to end now. If the Carriers don’t want to pay Container Royalty, then bring back all the warehouses, and start stuffing and stripping again. A Carrier does not have to pay Container Royalty on a Container that has been stuffed and stripped by the ILA. Automation continues to reduce the number of hours for hard working ILA members. Container Royalty wage supplements are more important today for ILA members than its ever been to keep America’s commerce moving with skilled, trained longshore workers.

WAGES: ILA and USMX have exchanged proposals and demands regarding on Wages based on a tentative six-year contract. The ILA has put in its demands wage increases that are reasonable and would enable our employers to remain competitive.

The International Longshoremen's Association The International Longshoremen’s Association, AFL-CIO is the largest union of maritime workers in North America, representing upwards of 65,000 longshoremen on the Atlantic and Gulf Coasts, Great Lakes, major U.S. rivers, Puerto Rico and Eastern Canada.

Organized in 1892 along the U.S. Great Lakes, the ILA is affiliated with the American Federation of Labor and Congress of Industrial Organizations; the Canadian Labour Congress and the world-wide International Transport Workers’ Federation.

Additionally, the International Organization of Masters, Mates and Pilots; the United Marine Division Tugboat Workers and the New York State Supreme Court Officers are affiliated with the ILA.

In its contract proposals to the ILA, USMX continues to treat ILA workers like second-class citizens. In all its public pronouncements on wages, USMX fails to note that longshore labor cost amounts to between 3% and 4% of the shipper’s total cost. Unlike other hourly workers who work a 40-hour workweek, most longshore workers make themselves available for work on a daily basis. Early on, the ILA negotiated a guarantee of a day’s pay. Otherwise, the employer had no obligation to pay if a vessel did not arrive on schedule. To the employer’s benefit, Guarantee Annual Income no longer exists.

Also very important to note: For over 20 years, our employers enjoyed paying tiered wages where newer longshore workers were paid much less than their senior counterparts. The system was unfair and there was never light at the end of the tunnel. History shows that management enjoyed huge savings while ILA members, their locals, the Districts and the International all suffered with reduced revenues.

ILA HEALTH CARE FOR WORKERS: The ILA’s National Health care program is called “MILA” Part of MILA is funded through Container Royalty money mentioned earlier.

USMX current proposal is that our MILA fund is so solvent that they’d like to defer payment of CR 4 for two years.

pay it back within third year of agreement. Their math is fuzzy. They claim CR 4 contributions down the road will be greater than the current $1.15. We think their contributions would end up being less with even a 5% bump in container growth.

USMX pledged early in negotiations that no matter what we agreed to with MILA, our fund would be sound and secure because they’d automatically pump money into the fund if the current $800 million reserve were to fall below $600 million.

They called it a trigger and that it would kick in when the fund went below $600 million. CR-4 would restart.

Somehow, talk of a “trigger” has stopped.

Their new formula? They only want a 6-month reserve with no trigger. That formula would take our current $800 million reserve down to the $200 million mark.

They will “Guarantee” the current benefit for the life of the contract if we agree to that two-year deferred payment to CR-4.

The ILA asks “What reserve will we have at the end of a contract with this formula?” We are unsure about the impact from OBAMACARE. ILA refuses to jeopardize the future of our MILA program by shortsighted decisions.

Healthcare is extremely important to our members and their families and we want it financially secure.

ILA History & Origins In 1892 delegates from eleven (11) ports convened in Detroit where they adopted the by-laws of the longshoremen’s Chicago local and the name National Longshoremen’s Association of The United States. By 1895, the name was changed to International Longshoremen’s Association to reflect the growing numbers of Canadian members.

Shortly thereafter, the ILA affiliated with the American Federation of Labor (AFL).

As the turn of the century loomed, the ILA had approximately 50,000 members, almost all on the Great Lakes. By 1905, membership had doubled to 100,000, half of which were scattered throughout the rest of the country. ILA leaders focused on eliminating independent stevedoring firms and securing closed shop contracts. ILA President Keefe bargained with employers, guaranteeing uninterrupted work in return for badly needed improvements in working conditions and wage increases.

After decades of strife and change, the ILA reports that it has finally lived up to its bygone leaders’ vision of a modern union-from scholarship programs.to charitable giving through the ILA Children’s Fund.to the ILA Civil Rights Committee’s commitment to advancing social justice.to labor-management cooperation initiatives like the Industry Resources Committee. The International Longshoremen’s Association stands ready to meet the challenges of the Twenty-First Century head on.

As of December 28 2012, the ILA and USMX have come to a tentative agreement on container royalties for a new Master Contract.

USMX views this as a loan, promising to Port Bureau News / January 2013

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Counter Point The United States Maritime Alliance (USMX) describes why it believes in management’s position in the ILA/USMX negotiations.

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What’s at Stake

The longshore industry plays a vital role in the flow of international trade and commerce, the lifeblood of the U.S. economy. The 14 East and Gulf Ports alone support 14,500 jobs for ILA members and more than half a million additional jobs directly related to the shipping industry. In all, the industry generates economic activity that accounts for more than two million jobs, $98 billion in wages and $11 billion in state and local tax revenue.

USMX’s 43 members – carriers, marine terminal operators and port associations – are committed to protecting the industry’s market share on the East and Gulf Coasts and its ability to compete in a global economy while continuing to provide jobs to ILA members. With an average wage of $50 an hour, ILA workers earn more than twice the average union wage in the country.

Since 1977 the United States Maritime Alliance, Ltd. (USMX) and its predecessor organizations have successfully negotiated contracts with the International Longshoremen’s Association, AFL-CIO (ILA) with-

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Port Bureau News

out any disruptions to service.

This year it is imperative that we do the same. East and Gulf Coast ports support hundreds of thousands of jobs and are crucial to both national and local economies.

to go. And that’s an outcome that neither the ILA nor USMX wants to see.

Both sides - labor and management - recognize the importance of reaching a timely agreement to ensure that more than 110 million tons of import and export containerized cargo continues to move each year through ports from Boston and New York to Charleston and Houston.

The USMX and the ILA have worked closely together for decades to create a climate of stability that has helped us attract and maintain business to the ports. At USMX, we’re committed to continuing that level of cooperation during the current round of negotiations and to reaching agreement on a contract that addresses the challenges we face and, in the end, is fair to both sides.

The Road to Success

Container Royalties

To succeed, the industry will need to introduce new technology to port operations – technology that will increase the capacity of the ports, improve efficiency and promote business growth, which in the end is the best possible guarantee of jobs.

The first container royalties were established in 1960 as a way to protect members of the International Longshoremen’s Association, AFL-CIO (ILA) in New York from job losses created by containerization and its introduction of automated cargo. In the more than half a century since, container royalty payments to ILA workers, not only in New York but at all the East and Gulf Coast ports, have increased dramatically, reaching over $211 million in 2011 alone. Not all of that money ends up in the pockets of ILA members; their union gets 10 percent – $21 million last year

The expansion of the Panama Canal and increasing volumes of U.S.-bound cargo from Asia offer a great opportunity for growth for the East and Gulf Coast ports.

But without the productivity improvements that technology can help deliver, ships carrying that cargo will find somewhere else

What is the USMX? The United States Maritime Alliance, Ltd. (USMX) represents employers of the East and Gulf Coast longshore industry. Membership consists of 24 container carrier members, including the 10 largest carriers worldwide, and every major marine terminal operator and port association on the East and Gulf Coasts. USMX’s members are responsible for the transportation and handling of cargo shipped to and from the United States. The non-profit, incorporated membership association headquartered in Iselin, New Jersey is led by Chairman and CEO, James A. Capo.

Since 1977 the United States Maritime Alliance, Ltd. (USMX) and its predecessor organizations have successfully negotiated contracts with the International Longshoremen’s Association, AFL-CIO (ILA) without any disruptions to service. East and Gulf Coast ports support hundreds of thousands of jobs and are crucial to both national and local economies.

– through a checkoff from each member’s royalty payment.

The initial reason for implementing container royalties – to protect ILA members from the loss of work – has long been forgotten. Today, thousands of workers who were not even born in 1960 – or in 1968 when container royalties were first distributed – continue to receive payments that in 2011 averaged $15,500 for ILA workers at the 14 East and Gulf Coast ports.

Unlike the Port of New York and New Jersey, then and now the predominant port on the East Coast, ILA workers at ports like Savannah and Charleston saw their job opportunities grow because of containerization. The container royalties they receive have been a bonus that has nothing to do with any adverse job impact caused by containerization.

The dramatic increase in royalty payments resulted from a combination of two factors – the reduction in the number of ILA workers and an increase in the tons of container cargo – from about 50 million tons in 1996 to 110 million in 2011.

With fewer workers and more tons, royalty payments, which are based on the weight of containerized cargo, have increased over the years. In the 14 years ending Sept. 30, 2011, the payments totaled $1.8 billion. In Savannah alone, they increased from $6,028 in 1996 to nearly

$36,000 per worker in 2011.

In reality, container royalties have morphed from an assessment imposed through arbitration in 1960 to what they are today – another form of compensation for ILA workers, who are among the nation’s most highly compensated. The vast majority of ILA workers were not alive when containerization was introduced in New York in the late 1950s. In fact, only 136 of the 3,281 ILA workers at the Port of New York and New Jersey today were working at the port in 1968, the year container royalties were first distributed.

In the current negotiations over a new Master Contract, management is not asking to eliminate container royalties, only to cap the payments and use the excess, not as savings for employers but to help pay for other benefits for ILA workers.

the U.S. Department of Labor’s Bureau of Labor Statistics.

ILA members also have one of the best healthcare plans in the nation, paying no premiums for family medical, dental and vision coverage and only minimal co-pays. Management covered 97 percent of the $400 million cost of healthcare in 2011 for both active and retired longshore workers and their dependents. That compares with the 72 percent share that U.S. companies pay on average to provide healthcare coverage for their employees, according to a 2011 survey by the Kaiser Family Foundation.

The total cost of the Master Contract covering 14,500 ILA members is an estimated $1.8 billion for the year ending September 30, 2012, the final year of the agreement.

Employee Compensation Longshore workers are among the best paid union workers in U.S. Longshore workers have a superior wage and benefits package that places them among the best paid union workers in the country. ILA members on the East and Gulf Coasts earn an average of $124,138 annually in wages and benefits. In wages alone, they make $50 an hour, more than double the average hourly wage of about $23 earned by all union workers in the United States, according to Port Bureau News / January 2013

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The Taft-Harley Act Prior to the December 27, 2012 container royalty agreement and temporary contract extension between the ILA and USMX, a possible longshoremen strike loomed over the East and Gulf Coasts. Many organizations were calling on President Obama to intervene if a strike should occur using the Labor-Management Relations Act of 1947, commonly referred to as the Taft-Hartley Act. Fortunately, a strike has been averted this time, but the maritime industry has been enjoined by this act more than any other industry.

National Labor Relations Act of 1935 – The Wagner Act

Providing marine services to vessels along the Gulf Coast for over 20 years. We own and operate USCG approved liquid vacuum trucks, a 10,000 bbl Tank barge for marine pollution (Marpol) waste, a 10,000 bbl tank barge for carrying industrial wastewater, a 10,500 bbl tank barge for carrying clean chemicals and a 1800 horsepower Tug for removal and transportation of various material.

Intergulf can accept the following materials • • • • • • • • • • •

MARPOL Annex I and II Wastes Category X Tank Washings Engine Room Sludge Tank Washings / Cargo Washings Hazardous Products using preapproved disposal facilities Used Oil Oily Bilge Water / Oily Ballast Water De-Bunkering Off-Specification Products and Fuels Gray and Black Water Hazardous and Non-Hazardous Waste

The predecessor of the Taft-Hartley Act, the National Labor Relations Act of 1935, or NLRA, was signed

by FDR as one of many of the New Deal pieces of legislation, and sometimes referred to as “Labor’s Bill of Rights.”

With the goal of reducing the burden of labor disputes on commerce and protecting the rights of private employees, FDR declared upon signing the act into law, “A better relationship between labor and management is the high purpose of this Act…By preventing practices which tend to destroy the independence of labor, it seeks, for every worker within its scope, that freedom of choice and action which is justly his.”

The NLRA covered the majority of firms and employees affecting interstate commerce, notably excluding government, railroad, and domestic employees, and those subject to the Railway Labor Act. To enforce the Act, it also established the National Labor Relations Board (NLRB), an independent federal agency tasked with administering the act and certifying union representation through employee elections.

The Act protected the rights of employees

“Cost and Convenience Are Not Considerations When Addressing Safety”

(281) 474-4210 www.intergulfcorp.com • info@intergulfcorp.com 24 Port Bureau News

DIRECTION Maritime Solutions for Moving Forward

Photo from a worker’s strike in the early 20th century.

PORTS

to organize and join labor unions, to engage in collective bargaining with representatives of their own choosing, and to participate in concerted activities to support their demands, such as striking.

MARINE HEAVY INDUSTRIAL COASTAL PERMITTING

On the employers’, or managements’, side, the Act specifically defined and forbade five types of unfair labor practices: 1. Interfering with or restraining employees who are exercising their rights to organize and to bargain collectively.

3. Refusing to bargain collectively and in “good faith” with unions representing their employees.

4. Discriminating against employees who file charges or testify.

5. Discriminating against employees to either encourage or discourage union membership or acts of support for a union.

Under these restrictions, and particularly the last one, both closed and union shops were permitted. A closed shop refers to the practice of an employer agreeing to hire only union members, or in other words, union membership is a requirement of employment, and a union shop is when an employer requires employees

Scott Dobry

2. Attempting to dominate or influence a labor union.

www.hdrinc.com

to either join a union or pay fees in the equivalent of union dues within a specified time after employment begins.

Following the passage of the Wagner Act, union membership steadily grew, with unions representing almost 34% of private, non-agriculture workers in the 1940s. After the end of World War II, America experienced a sharp rise in strikes, with as many as 5 million workers striking during 1946. The labor movement began losing public opinion, ripening the political environment for a change to the Wagner Act. Port Bureau News / January 2013

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Labor-Management Relations Act of 1947 – The Taft-Hartley Act After a decade of failed attempts at reforming labor relations, including a US Supreme Court case confirming the constitutionality of the Wagner Act, the Republican Party won control of Congress for the first time in fifteen years and set about repealing and amending New Deal legislation. The 80th Congress in 1946-1947 included a vibrant freshman class, including future Presidents John F. Kennedy and Richard Nixon.

The Taft-Hartley Act aimed at reducing the power of unions and providing emergency response to strikes that could endanger national health or safety.

A majority of both parties in both houses voted for the proposed Labor-Management Relations Act and passed the Act despite it being vetoed by President Truman. In his speech explaining his veto, Truman described the Act as “a shocking piece of legislation” and predicted it would damage “fundamental democratic freedoms.” Despite these strong words and future promises to unions to repeal or amend the Taft-Hartley Act, President Truman used it to enjoin strikes twelve times throughout his presidency.

The Taft-Wagner Act amended the Wagner Act by adding a list of unfair labor practices committed by employees and unions, whereas the Wagner Act had only forbidden unfair labor practices by employers. Amendments included prohibiting certain types of strikes, including jurisdictional, wildcat, and political strikes, along with banning secondary boycotts which target businesses that are not in the primary dispute.

Individual states were allowed to pass rightto-work laws which prohibit closed shops, and

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Port Bureau News

union shops, though still permitted, were required to follow more stringent restrictions.

One of the more controversial amendments required union leadership to file affidavits declaring they were not supporters of or affiliated with the Communist Party – this was struck down as unconstitutional in 1965.

The provision which is most likely to interest the current American considering recent circumstances is the power of the executive branch to seek an injunction against a strike or lockout under the premise that continued arbitration is more productive to a settlement than a strike.

When the president has cause to believe the strike will cause harm to national health or safety, he can appoint a board to investigate the dispute. Upon receiving the board’s report, which historically have found little chance of resolution between union and management, the president can request that the Attorney General seek a federal court injunction to discontinue the strike.

If the federal court finds the president’s claims of endangerment to national security to be valid, the court will enjoin the strike, forcing the striking workers back to work and setting a 60-day window for the parties to resolve their dispute. If the union and management have not settled by the end of sixty days, management submits a final offer. The National Labor Relations Board then has fifteen days to poll employees about their acceptance of the offer and five days to tally the votes, totaling the 80-day “cooling-off period” often referenced.

At the end of these 80 days, if the employee poll reflects the workers’ rejection of management’s offer, the workers are allowed to continue their strike.

For maritime strikes, more than 40% of injunctions are followed by another round of striking because forced arbitration failed to bring the parties to a resolution.

H

arris County Judge Ed Emmett is a tremendously respected figure in the Maritime Community.

Edward M. Emmett became Harris County Judge on March 6, 2007 after a career in public service with a special focus on transportation and energy policy.

His tireless enthusiasm on initiatives designed to help the communities and industries along the Houston Ship Channel caused the Greater Houston Port Bureau to name him the 2012 Maritime Person of the Year.

Judge Emmett gives the 2012 State of the County Address

Judge Emmett tours ship channel facilities with USCG Sector Houston-Galveston

transportation policy.

A member of the Texas House of Representatives from 1979 to 1987, Judge Emmett was chairman of the Committee on Energy, a member of the Transportation Committee, and represented the state on numerous national committees relating to energy and

In 1989, President George H. W. Bush nominated Emmett as a Commissioner at the Interstate Commerce Commission. After being confirmed unanimously by the United States Senate, Judge Emmett served on the commission for three years. Prior to becoming county judge, he received international recognition for his work in transportation and logistics policy.

Among his many other activities, Judge Emmett is director of Harris County’s Office of Homeland Security and Emergency Management, chairman of the Houston-Galveston Area Council’s Transportation Policy Council and Chairman of the Harris County Juvenile Board.

Judge Emmett shows the Houston Ship Channel to officials from Texas Parks & Wildlife

Judge Emmett attended Bellaire High School. He graduated from Rice University in 1971 with a Bachelor of Arts degree in Economics and from the University of Texas at Austin in 1974 with a Master of Public Affairs degree. Judge Emmett and his wife, Gwen, have been married for 37 years and have four children and nine grandchildren.

Port Bureau News / January 2013

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