USA North West: Delays at grain terminals


Published: 2 September 2014

The background

Nearly a quarter of all US grain exports and more than one third of US wheat exports move through nine marine terminals on the Columbia River and in Puget Sound in the northwest US. Any delays in loading and dispatching ships would disrupt economically-important US grain exports to Asian markets and would likely lead to overwhelming the network of grain storage facilities in the region.

Historically, the International Longshore and Warehouse Union ("ILWU") has held the jobs both inside the grain terminals and on the ship side. Six of the terminals together make up a consortium known as the Pacific Northwest Grain Handlers Association (the "GHA"). The members of that consortium have operated for many years under a single collective bargaining agreement with the ILWU. The most recent contract between the GHA and the ILWU expired 30 September 2012. Since then, an intense labor dispute has unfolded between the parties.

In February 2013, United Grain, a GHA consortium member and the west coast's largest grain elevator, imposed a lockout of the ILWU after alleging that an ILWU member had sabotaged grain handling equipment at the terminal. Another GHA member, Columbia Grain, imposed a similar lockout a few months later. The ILWU set up picket lines at the terminals ever since the lockout. In the meantime, negotiations to resolve the dispute between the union and the GHA continued off and on.

July 2014 development

In late July 2014, Washington State governor Jay Inslee said that the Washington State Patrol would stop providing security to government grain inspectors who crossed the ILWU picket lines at the terminals to certify the cargo for export. Without that security escort, the inspectors refused to cross the picket lines due to fear for their personal safety. Without the inspectors issuing certificates for the grain, exports came to a near standstill. Soon thereafter, a federal mediator announced a tentative agreement between the parties.

The union members are voting on the tentative agreement now, and ILWU should announce the results of the vote any day. With the tentative agreement reached, the ILWU reduced its picketing at the terminals, allowing the inspectors to resume their work without fear for their safety. If ratified, the agreement will come just in time before the harvest season gets into full swing, with reportedly record yields of crops in the US after a favorable growing season.

Loss prevention advice

Members, whether owners or charterers, need to be particularly attentive to the rights and duties incumbent upon them in the event of delays to loading cargo in situations where there is labor unrest at the loading port. Most voyage charter parties contain strike clauses such as the Centrocon strike clause and the Gencon strike clause which allocate the effects of a strike on owner's and charterer's obligations when a vessel is delayed because of a strike. For example, under the Gencon strike clause owner can, when confronted with a strike at the load port, ask the charterer to declare within 24 hours that it agrees "to reckon the laydays as if there was no strike". If the charterer fails to so declare, the owners have the option of cancelling the charter.

An initial issue which needs to be determined is what constitutes a strike. Not all labor disruptions are considered strikes and it is charterer's burden to prove whether the subject event constitutes a strike. It has been held that a strike is a general concerted refusal by workman to work in consequence of an alleged grievance. It is also necessary to for there to be causation between the strike and any lost time for the strike clause to apply. Furthermore, it is charterer's absolute duty to have cargo ready to be loaded for the strike clause to have effect.

Frequently, disputes arise regarding whether congestion at the load port is the consequence of a strike. Again, it is charterer's burden to prove that any congestion was caused by a strike and not a result of general congestion.

If labor disputes in the Pacific Northwest flair up again it would be prudent to seek the club's advice regarding what steps can be taken to minimize the effects of any strike on members operations. In the meantime, paying particular attention to the terms of any strike clause during charter party negotiations would also be wise.

Addendum: the present dispute appears to be in the final stages of reaching a conclusion according to latest media reports.

By Philip Lempriere
Keesal, Young & Logan
1301 Fifth Avenue, Suite 3300 | Seattle, Washington 98101
206.622.3790 (office) | 206.343.9529 (fax) |