It is unclear whether ocean carriers will avoid a newly opened container terminal in South Carolina until a labor dispute is cleared up. But at least for now, it appears most shipping lines are steering clear of the Port of Charleston’s Hugh K. Leatherman Terminal to avoid being caught up in a lawsuit filed by the International Longshoremen’s Association (ILA).
Over the next 15 days, only two container ships are slated to be handled at the Leatherman Terminal. Forty vessels are scheduled to berth at the Port of Charleston’s neighboring Wando Welch Terminal in the same time period.
A National Labor Relations Board (NLRB) administrative judge on Tuesday was to consider a charge brought by the South Carolina Ports Authority (SCPA) and the state of South Carolina in early January that the ILA, its Local 1422 and United States Maritime Alliance (USMX) were trying to force the use of union labor at the Leatherman Terminal.
That hearing has been postponed until June, “giving the NLRB time to analyze additional charges filed by the parties in response to a lawsuit filed by the union,” the SCPA said.
On April 20, the ILA filed suit in New Jersey Superior Court against Hapag-Lloyd, which was the first shipping line to utilize the Leatherman Terminal after its opening earlier that month. On April 26, the ILA amended the suit to add Orient Overseas Container Line Ltd. (OOCL), which also used the terminal. The ILA is seeking a total of $300 million in damages for “tortious interference with a contractual relationship, tortious interference with advantageous business advantage, breach of contract and civil conspiracy.”
“The Hapag-Lloyd and OOCL ships intentionally went to Leatherman Terminal even though they knew that workers who were not in the master contract bargaining unit would be hired to unload containers and to handle containers on the terminal,” the lawsuit states.
The USMX is named in both the South Carolina and ILA cases. South Carolina officials don’t think the USMX is helping protect the SCPA’s labor model. The ILA doesn’t think the USMX is helping put union longshoremen to work at the Leatherman Terminal.
“USMX was aware that Hapag-Lloyd and OOCL intended to bring their ships to Leatherman Terminal in April 2021,” the ILA’s lawsuit states. “USMX did not do anything to dissuade any signatory carriers from utilizing the nonbargaining unit labor and, indeed, may have encouraged them to do so.”
At the heart of the issue is a provision in the master contract between the longshoremen and USMX regarding the use of union labor at ports along the East and Gulf coasts. The SCPA and the state of South Carolina argue that the Leatherman Terminal is outside the scope of the master contract and that the ILA and USMX cannot force “current state jobs to become unionized.”
South Carolina’s ports have long used a hybrid labor model in which some jobs are performed by state workers and others are handled by union members employed by private-sector companies.
SCPA President and CEO Jim Newsome told American Shipper after its complaint was filed with the NLRB in January that a clause added to the master contract in 2013 said the USMX and the ILA would conduct a study to determine how the hybrid labor model “could be altered to permit work currently performed by state employees to be performed by ILA-represented employees in a more productive, efficient and competitive fashion.” But no such study was done, and the SCPA believes it therefore is unlawful for the ILA to force the use of union labor at the Leatherman Terminal.
The SCPA issued a two-page statement to American Shipper on Tuesday evening in which it asserted the ILA’s “forced unionization tactic violates the federal National Labor Relations Act (NLRA) and the public policy of the state of South Carolina. As its ultimate impact, it could endanger the current and long-standing historical operating model that exists in all South Atlantic public operating ports.”
The Leatherman Terminal “handled its first ship on April 9 and has handled four more ships since then,” the SCPA said.
One was the OOCL Brussels. The working of that container ship got OOCL added to the ILA’s lawsuit. Two others — the Antwerpen Express and St. Louis Express — are operated by Hapag-Lloyd, which already is being sued by the ILA.
The SCPA said the ships were handled at the Leatherman Terminal “under the same traditional operating model that has been used at South Carolina Ports for more than 40 years, with a full complement of local union labor and state employees with no disruption other than the normal ‘teething’ pains of a terminal launching operations.”
The recently finished first phase of the Leatherman Terminal project adds 700,000 twenty-foot equivalent units (TEUs) of annual throughput capacity to the Port of Charleston. The terminal was nearly 20 years in the making. The SCPA filed permits in 2003 to develop a container terminal on the south end of the former Navy base in North Charleston. Site development and construction began in 2018. At full buildout, the $2 billion Leatherman Terminal will have three berths and cover 286 acres, adding 2.4 million TEUs of annual throughput capacity.
The SCPA said the ILA’s lawsuit is “a clear intimidation tactic targeting the shipping line customers of SC Ports Authority, all of whom are members of the USMX and agreed to utilize Leatherman Terminal.”
If that was the goal of the litigation, apparently the tactic is working.
“The lawsuit is having its intended effect as certain Ocean Alliance shipping lines and The Alliance shipping lines have asked that their ships not call Leatherman Terminal until this matter is ‘resolved.’ Despite prior assurances from the union through a stipulation filed with the NLRB that Leatherman Terminal would operate as normal until the judge has ruled in the pending NLRB proceeding, these lines are now being intimidated to either return to Wando Terminal or divert these vessels to other South Atlantic ports, which have the same operating model that they are objecting to here,” the SCPA said.
The SCPA said it has “agreed to the request of these lines and will move two services back to Wando Terminal, leaving one at Leatherman Terminal, pending more clarity on actions from the NLRB. This is not a sustainable solution, but in the short term, it will help mitigate the harm caused by the unlawful union tactics and assure the continuity of service to which our customers have become accustomed while further protections are sought through the legal process.
“These issues should have been professionally addressed through the pending NLRB proceeding or the arbitration clause that exists in the master contract between the shipping lines and the longshoremen union, but unfortunately, the union has engaged in illegal, unfair and deceptive practices to intimidate — successfully — certain shipping lines to try and leverage the unionization of state employees,” the statement continued.
Germany-headquartered Hapag-Lloyd wouldn’t comment on the pending litigation. Asked to confirm that CMA CGM had changed a port call to avoid being added to the lawsuit, a spokesperson for the French shipping line said it valued its partnerships with the port and the ILA and would not weigh in on the matter.
The SCPA indicated Tuesday there is at least a temporary cease-fire, saying the ILA and USMX have “agreed to allow ships scheduled to call on Leatherman Terminal to be berthed and worked, pending the outcome of the hearing.”
But more calls have been removed from the Leatherman schedule in just the past couple of days. A check of SCPA’s vessel schedule on Monday showed the Yang Ming Warranty was due to arrive at the Leatherman Terminal next Tuesday, followed by the COSCO Hope on May 13. By Wednesday, both container ships had been moved on the schedule to berth at Wando Welch.
As of 3:45 p.m. EDT Wednesday, one vessel, the Agios Minas, was at berth at the Leatherman Terminal. None were scheduled to arrive there in the next day and a half. Six ships were either at berth or scheduled to arrive at the Wando Welch Terminal in the next 36 hours.
Over the next 15 days, only two vessels, both Hapag-Lloyd container ships, are slated for the Leatherman Terminal. Forty vessels, including OOCL and CMA CGM ships, are scheduled to berth at Wando Welch in the same time period.
The SCPA contends that protecting its hybrid model is vital.
“Should the objective of a different and more expensive labor model be successfully achieved at Leatherman Terminal, it would put SC Ports Authority at a competitive disadvantage within our region as none of our container line customers would utilize the terminal, defeating the very purpose of building port infrastructure in support of South Carolina’s supply chain and maritime community,” it said.