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Testimony of George W. Cashman, Director, IBT Port Division,
Before the House of Representatives Committee on the Judiciary March 22, 2000 Mr. Chairman and Members of the Committee, my name is George W. Cashman and I am the Director of the Port Division of the International Brotherhood of Teamsters. It is a pleasure to appear before you today to support H.R. 3138, the Free Market Antitrust Immunity Reform or "FAIR" Act of 1999, that proposes to eliminate antitrust immunity for ocean carriers. I am here today on behalf of General President James P. Hoffa and the 1.4 million members of the Teamsters Union. I am also here today representing the over 40,000 truck drivers who haul intermodal containers in ports located throughout the United States and who, in the near future, will be Teamsters members. In addition to my role as the Director of the Teamsters Port Division, I am also a Director on the Massachusetts Port Authority, Secretary-Treasurer and Principal Officer of Joint Council No. 10, New England, and President of Teamsters Local No. 25, Boston, Massachusetts. I thank you for the opportunity to address these important issues. United States ports and the shipping industry form the foundation for international trade on which the vitality of the United States economy depends. According to the Journal of Commerce, in 1999, shipping lines transported over 17 million intermodal containers valued at approximately $652 billion. It is predicted that container volumes will increase 8% annually through 2002. Based upon these promising statistics, one could easily assume that everyone associated with the flourishing shipping industry is reaping its rewards. This is certainly true for owners of the large, foreign-owned ocean carriers, which have reported substantial growth in earnings. It is also true for port authorities, which directly benefit from increased container traffic at their ports. Unfortunately, this has not been the case for two critical segments of the industry: port truck drivers and non-vessel operating common carriers or NVOs. In October, Mr. Chairman, you made reference to the fact that in passing the Ocean Shipping Reform Act ("OSRA") of 1998, Congress left out the "little guys." You were referring to the NVOs, freight forwarders, small and medium sized shippers, and shippers’ associations. The real "little guys," who have been left behind and ignored in this process, are the port drivers. Until now, port drivers have had no voice in the process. Thus, not only did they not receive any of the protections handed out by Congress in OSRA, their plight was not even considered or discussed. Port drivers are one of — if not the — most poorly treated class of workers in the United States. This is due in large measure to the unchecked bargaining power of the foreign-owned shipping lines. Despite the financial success of the shipping lines, port drivers earn substandard wages and have not received any type of pay increase in over a decade. On average, port drivers earn an effective wage of $7.00 to $8.00 per hour, or approximately $14,000 to $16,000 per year. They are not provided health benefits — either for themselves or their families, nor do they receive pension or retirement benefits. They have no job security. They are required to perform unpaid work in the ports for which they are not insured against injury. Routinely, they are: (1) required to clean out containers and expose themselves to hazardous materials and toxic substances, (2) forced to drive overweight and unsafe containers on public streets and highways, (3) required to drive unsafe chassis and trailers provided to them by trucking companies or shipping lines, and (4) subjected to harassment and retaliation if they report unsafe or illegal activities to the appropriate authorities. Hidden behind the protection of antitrust immunity, shipping lines participate in rate setting discussion groups. The coordination, however, does not stop with rate setting. They then utilize these groups to enter into secret contracts to set rates exclusively to their own benefit and to the detriment of, among others, the port drivers. This is done by collectively setting rates that include the cost of transporting the containers inland. The shipping lines apparently have agreed that they will effectively provide inland container transportation as part of the shipping charge to their customers. Thus, the highly profitable shipping lines pay low rates to trucking companies which, after taking their percentage, pay port drivers only a bare minimum for the transport of containers. The shipping lines also appear to have agreed, for the most part, not to contract with trucking companies that hire union drivers. What is shocking is that Congress has seen fit to continue antitrust immunity for these huge, foreign-owned conglomerates that earn millions of dollars in profits annually, much of which is from American consumers, while at the same time leaving the hard-working American port drivers unprotected. Because port drivers have been improperly "branded" independent contractors, they are prohibited under federal labor and antitrust laws from organizing or taking collective action concerning the slave wages they are paid. Meanwhile, immune from the antitrust laws, the foreign-owned shipping lines keep reaping monopoly profits. Indeed, where port drivers have attempted to band together to make the public and others aware of the horrific conditions they face, the Federal Trade Commission, at the urging of the shipping lines, initiated an investigation of the port drivers’ activities. As this Committee is well aware, under the guise of open market competition in the ocean shipping industry, OSRA continued the policy of granting shipping lines antitrust immunity for setting so-called "voluntary" rate guidelines and entering into confidential contracts in which the rates are kept secret. Antitrust immunity for ocean carriers was granted by Congress in the Shipping Act of 1916 to put American shipping lines on an even keel with their foreign competitors, which since 1875 had banded together in conferences to set rates on the trade lanes they served. Antitrust immunity was not designed simply to protect the United States flag fleet, but was also based on the belief that in return for making the enormous capital investment in vessels and equipment, ship owners should "secure a dependable return on investment, thus enabling the lines to provide new facilities for the development of the trade." House Merchant Marine Committee’s Alexander Report in 1914. The sound and rational reasons for establishing ocean carrier antitrust immunity over eighty years ago are no longer valid. First, there is virtually no United States flag fleet. In the last three years, American flagged vessels, that is, shipping lines owned and based in the United States have disappeared. Sea-Land has been sold to Maersk, a wholly owned subsidiary of Denmark’s A.P. Moller. Crowley Maritime’s South American services were sold to Germany’s Hamburg-Sud, and American President Lines has been sold to Singapore’s Neptune Orient Lines. Thus, protecting the United States flag fleet can no longer be used as a basis to support antitrust immunity. Second, the rationale of protecting shipping lines’ capital investment in vessels and equipment so that they can "secure a dependable return," thus enabling the shipping lines to provide new facilities for the development of the trade, is also no longer applicable. As a matter of policy, why is the United States Government protecting the investment returns of foreign-owned shipping lines? It would be one thing if the United States ship building industry were flourishing because these foreign conglomerates were building their new ships in the United States. That is certainly not the case. More fundamentally, the Government does not offer antitrust immunity to any other comparable industry. Air carriers are not exempt from antitrust laws despite their enormous investment in aircraft and equipment. It is also telling that the foreign-owned shipping lines are not using the profits they reap from antitrust immunity to invest in capital equipment. The chassis or trailers upon which containers are transported are owned by the shipping lines. The shipping lines, however, fail to maintain the chassis — they are not safe. This is demonstrated by the Department of Transportation’s current rulemaking to address this problem. Remarkably, when a chassis is cited for violating DOT safety regulations, it is the port driver who is required to pay the fines levied, not the shipping lines whose responsibility it is to maintain the equipment and who have been granted antitrust immunity so they can fund such repairs. Ocean shipping lines represent the oldest established floating cartel in the world. "Voluntary" pricing guidelines — which in reality are simply cartel price fixing — are established in carrier discussion agreements to discriminate against small shippers and intermediaries, and also against port truck drivers. In May 1999, with their immunity, ocean carrier groups implemented $400 to $900 per container shipping rate increases. How much of that increase was passed on to port drivers? None. The Teamsters are committed to remedying this situation. During the past several months, the Teamsters have delivered to port authorities around the United States a Port Drivers’ Bill of Rights which states that port drivers have certain fundamental rights. These rights include the right
Hard-working Americans are entitled to these basic, fundamental protections. Every day, port drivers work side by side with longshoremen, shipping line employees, and port authority employees all who have these basic, fundamental protections. What is shocking is that, in an industry that generates hundreds of billions of dollars each year, we allow these port drivers to be treated so unfairly. I request that, in addition to eliminating ocean carrier antitrust immunity, the Members of this Committee request that Federal Maritime Commission Chairman Creel add to his "OSRA Impact Study" the Act’s effect upon port drivers. So many times, Chairman Creel has testified that the purpose of OSRA was to level the playing field — I am here to tell you that the playing field is not level for port truck drivers. Adding insult to injury is the skyrocketing price of diesel fuel. In the last month, fuel prices have risen 60%. Nationwide, the price per barrel of crude oil has increased by 119% in the past year. Port drivers are paid on a per trip basis and their pay has not increased in more than a decade, while fuel, insurance, repairs, and all other costs to operate their trucks have continued to rise. The foreign-owned shipping lines under cover of their discussion groups secure fuel surcharges for themselves, but do not pass them on to the port drivers. Even when a shipping line decides to pass on a portion of the surcharge, the port drivers do not receive the surcharge because the trucking companies pocket it for themselves. Even when the port drivers do receive the surcharge — or a portion of it, the amount they ultimately receive is a pittance compared to the 60% increase in fuel prices. Port drivers are left with deciding whether to buy food for their families or properly maintain their trucks. As a result, this is not just a problem for port drivers, it is a problem for anyone who drives on America’s highways. No one wants a port truck driver to have to choose between feeding his family and properly maintaining his brakes or tires. Unfortunately, this is currently a fact of life for port drivers. Critics of your bill, Mr. Chairman, say it is too soon to act. They say wait two years and see how OSRA works. Port drivers, however, cannot wait and see. As it stands right now, whether or not OSRA works will have no bearing on the lives of port drivers. OSRA will not provide them with a living wage and safe trucks. And I am here to tell you that American port drivers do not have the luxury of time. They need your help now. Two years from now, too many American port drivers will have lost their trucks, their homes and their livelihoods. Two years is too long a time to wait when you are not earning a livable wage, are not provided healthcare benefits, and are not earning retirement benefits. Let me conclude by again thanking you, Mr. Chairman, for the opportunity to address these important issues. I believe that it is significant that a person of your stature, as Chairman of the House Judiciary Committee, is interested in the plight of the port drivers, and we truly hope that you will also join with the Teamsters Union to level the playing field for port truck drivers by eliminating antitrust immunity for the shipping lines. Thank you again for the opportunity to address these important issues.
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