R E P O R TVolume I I , No IDecember 2008

From The Chairman's Desk

Early Negotiations

As per our discussioi~ ~ at thespecial meetings of the USMXBoard of Directors and GeneralMembership on October 30% weare pleased to armounce that theILA and USMX have agreed tostart ear]y negotiations for the newMaster Contract¸

The eun~ent contract is set toexpire on September 30, 2010¸ It isvita] that we continue to protectthe economic benefits gained bythe industry because of continuedlabor stability on the East and Gulfcoasts¸ Negotiating a contract is achallenging prccess, requiringpatience, diligence, and a willinghess to compromise so that, m theend, the results are win win for allparties¸ ILA President PachieHughes and I are dedicated toachieving those resuhs We

E x p e c t t o c o m m e n c e n e g o t i a

hons in early 2009 Specificdetails regarding meetingdalen and IocatioI~ will beforwarded as they becomeavailable

We thank you for your continuedcommitment to USMX, and wouldlike to wish each of you a healthyand happy holiday season¸> ]amesA CapoChaionan & CEO

Norton Sch~oartz, Michael Garoey and Jim Capo

2008 AOTOSThe United Seamen'sService 2008 Adrenal ofthe Ocean Sea Awardswere pre~ented to Jame~A Capo, USMX chairman& CEO and to Michael DGarvey, Salt~hukRe~ourve~ foundingpartner and past chairman General Norton ASchwartz, US Air ForceChiel of Staff, received aspecial AOTOS

USMX Carrier Member Tonnage Assessment Reduction ApprovedAt the 2008 Am~ual Meeting, the USMX Membership approved a reduction in the USMX Carrier MemberTonnage Assessment from $0 05/ton to S0 02/ton, effective for vessels dosing on or after January I, 2009It is fully expected that th~ reduction will remain in effect until the end of 2016, barring any extraordinaryunforeseen circumstancen USMX Tonnage Assessment Invoices received on or after January I, 2009 willreflect the new tonnage assessment of $002/ton

We would also like to remind all of the USMX Cartier members that this r*duetion is in addition to the$0 02/ton cr*dit that you are recmwng as a resul t of the termil~a tion of the VIM*KS program and the en tablishment of the Carriers F~erow Fund (CEF) from the VIM*KS proceeds This means that if you still have a creditbalance in the CEF as of January 1, 2009, a credit will be applied to the new assessment In effect, you willnot be paying any tolmage assensment to USMX until your CEF balance is elimil~ated The amount of yourcredit balance will appear on the assensment invoice so as to allow you to calculate, based on your cmTenttonnage experience, the time r*mairang before you exhaust it and have to commence payment of the$002/ton If you do not have any balance left or were not part of the initial CEF program then you will pay atthe S0 02/ton assensment rate commencing January 1, 2009

[ ] R E P O R T PA G E 2

Advice on Softening the Economy's Impact on Labor Relations

All at us, whether it be in ourpersol~al lives or our prx~fesslonal lives, have felt the mightyblow that has been delwered bys u c h a d Y a m a t i c i F fl p a c t o n o u r

economy¸ Fourth quarter andyear end results will not beavailable for another 3045 days,but all of us are anticipatingsome very bleak numbers¸

[n this report, I would like tooffer a tew sugge~tiol~ that willhelp soften the blow in oureveryday dealings with theUnion during these difficulthines

Contractual Obligations

Whether/he economy is at anall time low or is star/rag tor~cover, we 0dSMX members)have a Contract with theInten~atonal Longshoremen'sAss~ziafion that ~s in effect untilSeptember 30, 2010 The Contractdoes not preclude you frommaking changes to your operahans to r~duce expense~, but itdoe~ r~quire that the changes fallwithin the framework of thecun~nt Contract This is a periodwhere all companies will belooking for ways to reduce costsand we at USMX are available towork with you and to provideadvice that will en~ure compliante with the Contract

Maintenance

I n m ~ t p e r i o d s o f e c o ~ o l ~ l C

downturn, the first thing thatCarrier~ do is to defer preventive

m a i n t e n ~ r l c e p r o ~ a m s T h e e

are prx~grams that do not haveto be per forn/ed m 2008 or 2009We must ensure, however,that when the progran~ arer~insttuted, that the work ~sper formed by ILA mechamcn

Minor damage ~s also a veryimportant item The Carrier hasthe right to decide if and whenminor damage repairs are to beperformed¸ The Contract, however, is perfectly clear: Artde IX,Section ~ states "When suchmarine terminal work is moved of[~e marine terminal by the terminaloperator or b~ a stgnatory carrier tofacilities in the port area, the ILAshall retain its work jurisdiction,where ~e work is ~e work ~atzaouId have been performed in the~ l a r # l e t ~ r ~ l i n a l o r p o r ~ a ~

S e v e r a l i n s t a n c e s h a v e s u r f a c e d

in the Port of Baltmore allegingthat Corners are having minordamage repan ed m nonuniondepots within the port area Weask that you review your operatons to el~ure that you m~ incompliance USMX is availableto answer any question~ youmzght have

Conlmunicafion is the Keyto Success

There is no doubt that ourmember Carrier~ and TerminalOperators will have to introduce change to then operatons in order to survive thistime of economic downturnAgain, we at USMX m~

committed to providing expertadvice and service to ourmember~ to ensure that thechange~ are in compliance withour members' conb'actualobligations But, more lmpor tanLis the manner in which thesechange~ are communicated andimplemented For instance,practice~ that have been in placetar several years should not justbe changed on a Monday morning, even though the Contractindicates that you could do thatA much better way, and one thatwould provide a seamlesschange, would be to communicate your proposed changes tothe Local ILA leadership Onceyou gain their understanding ofthe changes, it makes then jobeasier in dealing with complaintsfrom the union wolMolceinvolved m your operation

As with the other issues, USMXis available to assist you inthe development of yourc o r l ~ I / 3 U l / i c a t o n s

Brian E DuganVice President, Labor Relations

Report Distribution ListY o u c a n e x p e c t t o l ~ c e l v e ~ u t u l e

issue~ of The USMX Report via

The USMX Report, just sendrequest to Editor Beth Monica atbmonlca@usmx cam

[ ] R E P O R T PAGE 3

Container Freight Stations (CFS) Update

[n 2008 the CFS Board of Trusteesapproved the development of theCFS Subsidy Operator~ Manual Theidea behind the Manual was togive the operators specific detailsof the CFS prog~ am The manualanswer~ mo~t of the questioi~operators may have on the manyaspects ot the Program and thehistory behind its implementalion

The Manual was designed inquestion and al~wer format andcontains a glossary of definitionsfor the specific subsidy programt~rmmology The Manual alsocontains a section dedicated tocommunications, so that users willalways know whom to contact forany question that the ManuaI maynot address

The Manual contains 14 seclaonsaddressing key topic~ such as:

The history of the CI'S subsidyprogramThepresentCFSsubsidyprogramCu~nt males and ~gulationsApprovalprocedures forbecoming a CFS operatorCFS audit prccessProcedure for establishingh-ansaction labor intensities

~ Where to find the CFS~por ring system

~ Contacts for issues notinduded in the Mamtal

Shot fly after the first ot the year,all cut rent CFS operators willt~ceive a hard copy of theManual h will also be posted onthe USMX website lor downloading and ptinting

Cucrent Training Products

As I stated in the last USMXReport, we cu~ntly have an8 DVD set of safety traimngfilms and workbooks availableto all USMX Port Associationsand them ILA Lccals The EveryChoice Counts series, developedin conjunction with CoastalTechnologies, covers thefollowing topics that a~ vitalto training persormol workingo n ~ w a t e r f r o n t :

~. Per~onalProtecth,eEquipment on ~e Waterfront

Around Hazardous

Y o u c a n o r d e r t h i s s e F l e s

directly from CoastalTechnologies via e mail at:sales@coastal tom, ot youcan v~it Coastal's website atwww coastal tom The ordertorm for the series is alsoavailable for download andptinting on the USMX websiteunder Training

New Training Products

W e a r e p r o u d t o a D n o u n c e ~ h e

completion of a first ot its kind,

t~pair operations titled Focus onSa]etv: Be A Star This uniqueprogram was developed m conjunction with Coastal Technologiesand will be ~leased duringthe first quarter of 2009 throughCoastal's ~mai] or website Elevenlatles are available: Gene~allntroduction to

Langsho~ M&R Operatmns:Focus on Conhzfner Cha~s~and Ree]br Confiner Wo~

Pe~sonalSa]ety]orLongsho~eM&R Operation~ Folus on£~ntainer Chalsis, andReefer Container Wor~

Wor lp la le Safety ]or M&ROperation~ Focus on~ntainer Chals is , andReefer Container WorA

Binning and Welding Sqfety]or M&R Worket:~

Powered Hand Tools Sqfety]or M&R Worket:~

Safely Performing Multi Rimpieces Work

~bmmunicat ionlJorM&RWorkersSafe]vRepairlngStmddle~brriet:~ and RTGsSqfeJy Repairing CranelSa fe l vPe~rmingFa l i l i t vMaintenance Function~

Preventing Incidents iv+ theWo tpla e

MITAGS Training

The ILA/USMX training facil i tyat MITAGS will be offering anarray ot technical traimng classesin 2009 Courses offered include

(¢ontinued on Page 4)

[ ] R E P O R T

TWIC ProgramReimbursement byCFS Underway

In 2007, the Container FreightStation (CFS) Fund Trasteenapproved a ptx~gram that wouldreimburse all eligible DeepSeaILA membern for the applicationtees tor the Tral~pot tationWorkers Identity Card (TWIC)The resources for this programwould come from the Carrierassessments paid into the CFSfired The prog~ am to reimbursethe ILA was put into effect at thebegim~ing of 2008, with the localPort AssociatioD~ and someDirect Employers handling thedish ibution ot the filnds Todate, the CFS has approved anddishibuted lunds m the amountof $2,142,39250 covering theapplication fees ot 17,064 ILAmembern fiom Maine to TexasThe procens ot apptx~ving anddishibuting the filnds to thelocal Port Assccia lions has gone

2008 USMX Legal News

very smoothly We have heardof very few instances wherethere has been difficulty inreimbursing or paymg theTransportation SecurityAdministration 0"SA) direcdyfor a qualified ILA memb~sTWIC We would l ike to thankthe local port AsSC~lations fortheir diligence m making theacquisition of the TWIC cardsfor the ILA an easy processWe recognize that dealing withthe TSA through its vendorLockheed Martin was not aneasy task¸

By now, most of the portshave either gone live withTWIC or have been given theirstart dalen to implement TWICas the primary means otidentification and accens tomarine ternninals Again, therehave been some isolatedinstances where some glitcheshave occurred, but for the mostpart this has gone reasonablywe l l

& UpdatesCivil RICO CaseIn last yeal's USMX Repol t (Vol I, No 1, Dec 2007), USMX reportedthat MILA expected the Government to ignore the admonition ofJudge I Leo Glasser and indude MILA and othel i1~ litutiona]detendants m its Second Amended Complaint The Government didlust what MILA expected Fewer than three hom~ before themidnight deadlina on December 31, 2007, the Government filed itsSecond Amended Complaint, which continued to l~ame MILA andother organizations as nominal defendants MILA renewed itsmotion to dismiss on February I1 and urged the district court todismiss MILA with prejudice, since it did not share in any way thepropose of the alleged RICO Waterfront Fnterpnse The Governmerit had conceded this fact m open court and did not retract thatadmission in its May 16 answering brief MILA's motion and thedismissal motioD~ of other defendants were fully submitted to theCourt by June 30, 2008 Tile par tie~ are still awaiting a decision byJudge G lasse t ( con t inued on Page 5 )

PAGE4

[t is also our underntanding thatthere have been instances wheresome TWICs have been deniedby the TSA In these cases, theappeals process that is in effectappears to be working We havereceived very few complaints onthis front¸

Because of the delay by the TSAin actual maplementation of themonitoring program at themarine temainals, we haddelayed the auditing processNow that the ptx~grams tomonitor are underway, tile CFSTrustees will ptx~ceed to auditthe monies that have beendisttibuted to el~ure that theyare ptx~perly accounted for TheCFS Trustees will contact thelocal Port Assccmtions toarrange to audit their TWICprogran~ We lully expect thatth~s audit program will start inearly 2009

OIeA SweedlundExecuth,e Vice President & COO

MITAGS Training(continued trom Page 3)diesel electrical generator,container relrigeration, RTG,and experienced and inexp e r i e n c e d c ~ n e o p e r a t i o n ,

which utilize state o~the artsimulator equipmentStudents learn through acombination of dassroomlectures and hands ontraining¸ In 2008, the ILA/USMX program at MITAGSprovided important trainingfor I72 longshore workersfrom the various USMXmember ports¸> ThomasPSu l I i~n

Director, Labor ReIatlons

[ ] R E P O R T PA G E 5

(confim;ed Jrom Page 4)2008 USMX LegalNews & Updates

port of Discovery ArbitrationOn April 16, 2008, Arbitratorlohn E Sands issued his Ion~awaited decision m the Port ofD~scovery arbitration¸ TheOpinion and Second InterimA w a r d W a s a c o m p r o m i s e

balancing the interest of Local1804 1, InternationalLongshoremen's Association,AFL CIO, in maintaining itsjunsdictton over the maintenante and repair of containersagainst the interest of management in seeing that the flow ofgoods ~s not impeded whendamage to a loaded containerdoes not affect its structuralintegrity¸

The Arbitrator held thatArtide IX ot the MasterContract between USMX andthe ILA applies to loadedcontainers with malor damage(major damage loads) Thedecision sets Iorth the remedyof liquidated damages ($I,000

or $2,000, depending uponwillfulness) for a violation ofArticle IX The decision confirnred management's right todirect the delivery of a nmlordamage load to its consigneeAn employee may not r~fuseto comply and stop the pro~cessmg of tire malor damageload The effective date of tireAward was June I, 2008

On May 8, a lawsuit wascommenced in the UmtedState~ District Court for theDistrict of New Jersey, NaaYork Shippitlg Assoctatiotl, In,v Local I804 1, ltlternatiotlaILongshoremetl's Association,AFL C[O, 08 cv 2205 (FSH),seeking an order vacating theApril 16 Award and a dedaratory judgment that tire liquidated damages provision inArticle IX, section 4 of theMaster Contract is an invalid,unenfon:eable penalty that iscontrary to pubhc pohcybecause it is not a reasonableforecast ot just compen~attonfor the alleged harl~a causedLocal 18041 responded byfiling a counter~uit on June 19,seeking to confirm the Award

Both actions were thenconsolidated MagistrateJudge Patty Shwar tz directedthe parties to prepare, as asubstitute for discovery, adocument setting forth theIacts upon which both partiesagree The par tie~' stipulationot laets was submitted onOctober l0 The parties thenexchanged dispositivemotion~ on October 24 andresponsive briels onNovember 50 They are stillawaiting District Judge FaithS Hochberg's decision or anorder scheduling oral argument on the parties' motions

Fraud Investigation in the portof Boston Yields Indictments

h 2005 criminal investigation,commenced by the Massachusetts At tor~ey Genera] intofraudulent benefits, payroll, andunemployment compensalaonschemes involving longshoremenin the Port of Boston, has resultedin the indictment and convictionof 20 individuals, some of whom

were longshoremen who werefraudulently credited for hour~they did not work m ord~ toreceive health Insurancebenefits from MILA

The Suffolk Superior Courthas ordered that over $~50,000in restitution be paid A total ott~n defendants in the benefitsfraud cases have been orderedto pay over $155,000 in

restitution MILA is workingwith the Boston ShippingAssociation in an attempt to berecompensed for the cost otproviding health coverage totho~e individuals who receivedbut were not eligible Ior thec o v e r a g e

~ The I~mbos FirmUSMX Counsel

[ ] R E P O R T PA G E 6

Life After The Waterfront: Reflections of a Reluctant RetireeDoes the title make a readercurious? I hope so, tor I inviteyou to share some of myexperiences and thoughts in th~snew state in which I fredmyself retirement¸

Having spent nearly 50 years inour industry, I retired at the endof 2004 and here it is almost2009¸ Time really does fly! Notonly did we retire, but Gmnyand I decided to move toCalifomm for two reasons: allour children live here (and,amazing as it my sound, so farthey haven't moved elsewhere)and having two homes 3,000miles apart wasn't practical

After those almost 50 years in thebusiness, salt water and dieselflames are probably in my veins¸ Ifind myself continuing to lovebeing a part of the business eventhough we live in the desert, away~ To m t h e G c e a n ~ c o n t a i n e r c r a n ~ s

and diesel equipment¸

When we first moved here, wethought that golf would be THEmajor part of our new life, andalthough we truly enjoy living ina ~f communi ty and p lay ings e v e Y a l t l r n ~ s a w e ~ r w e c a m e t o

realize that golf alone ~s notenough¸ Take note you golferswho wil l soon retie

[ am presently finishing up atw~year tern/as ptesident otour 1,206 urat homeownersassoemtlon, which has a sixmillion dollar opetating budgetand a tour and a half milliondollar reserve fland This hasbeen very time coi~uming,

although rewarding But it istime tor someone else to stepup to the plate Besides, thepay is lousy¸ As they say onthe West Side, "not hin" fromnothin' leaves nothin" "

Over the course of thesealmost five years, many thingsseemed to have remained thesame, but as Bob Dylan mighthave saicl it, "changes were acomin" " Things that neverchanged indude my love of theindustry, which makes itnecessary to visit old friendsand to get my annual mflaslonof New York and the EastCoast¸

So, I continue to keep abreast ofdevelopments in Iongshoringand t et~inals anti maritime¸ I dosome Consulting, I talk to theoutpor ts, I've testified (bytolephone) in an arbitration ease,s a t i n o n t r a q : l e p r a c t i c e c a s e s

while on the East Coast,participated in the defense of atormmal operator being sued ina retable accidental death on thewaterfront, and I read the onlinelournal of Commerce andvarious other online reports¸ I'veattencled ret~ement flanctionsand awards d i imers forexample, John Bowers'retirement dinner anti 5iraCapo's AOTOS award¸ I'vecongratulated Richie Hughes onhas ascent to the presidency ofthe ILA These are some of thethings that have remainedc o Y ~ t a n t

On the other side of the ledgerthere are many things that

have changed, but all of theseare tr~mped by the present direeconomic conditions we fred inour world¸ With the hkes of anAIG and the Big Three Automakers (can we even call themthat anymore?) in trouble¸ Withthe demise of major banks antiWall Street players, with theconlanuing reports of ever morepeople out of work and real fearin markets around the world,our industry finds itself atc r o s s r o a d s n e v e r l r n a ~ l l e d

Carriers are cutting/combiningservices and laying up shipsThey are laying off employees¸Ports are also feeling the effectsof the worldwide economicd o w n t u r n ¸

Those presently employed arewotTiecl about 40~Ks and thepromise of future pension andhealthear e programs¸

Retirees have similar concernsabout the future anti the present¸There ~s a mentality abroad thatwe should put any money wemay have "under the mattress"

It is against that backgroundthat we have heard the verygood news from Richie Hughesand Jim Capo that they intend tobegin the bargaining for a newcontract well ahead of theSeptember 30, 2010 deadline¸

Having begun my career in themic11950s, I remember vividlythe days when management antithe ILA approached a contract

(, ontinued on Page 7)

] R E P O R T

Reluctant Retiree(contlmted ]rom Page 6)

deadline with great uncertainty,when the only thing that seemedto be reliable was that therewould be a strike, a Taft Hat tleyInjunction, a cooling off periodand at its tetTnination, aresumption of the s h-ike Itwasn't until the mid I970s thatthings began to change and ana g r e e m e n t o n a n ~ w c o n t r a c t

was reached without a majorstrike¸ This happy circumstancehas repeated itse] f in the intervenmg years¸ Major reasons forth~.s change, I believe, werecontainerization and intermoda]ism, which had come to maturityor at ]east to adolescence To putit simply, cargo could find otheroutlets if the East Coast was tiedup in a strike or a lockout¸

While not fully recognizing it byits name, the parties werediscovering something calledmutual interest bargaining andcoming to the bargaining tamewith new attitudes¸

So, as the parties sharpen theirpencils and update theircomputer models, as theC O I X S U ] t a n t s a n d a c t u [ l I l e s d o

their studies and make theirsuggestions, as the at tomeyscraft the language of newproposals, I remain on thesidelines, ever interested andhopeful of a successful outcomeof the hargalrang

There is always a great deal ofpressure on those revolved in thenagotia tions, that is on themembers of the ILA Wage ScaleCommittee, on the negotiating

committee membern of theUSMX, on the local PortAssOCiations and ILA locals,which also have to do their"thing" with the local agl ee~ments, on the leaders of bothsides This tlu~e, there is theadditional pressure on allthone revolved, occasioned bythe dire economic straits inwhich they find themselves hwould seem that there will bean even greater interent thanusual m these negotiations bythone m local, state and tedera]g o v e l ~ n / e n t s , f o r s o n 3 u c h i s a t

stake

It is agaiz~ t this backgroundthat this retiree offers hissincere hope for a peaceful andtan conclusion to the newcontract negotiatioD~

Perhaps, by this time nextyear, there will be an earlyChDstmas present to theindustry m the announcementby USMX and the ILA that acontract agreemen[ has ]seent~aehed a contract thai wil leD~ure stability in ourindus t ry we l l i nadvanceo fthe September 30, 2010deadline and for several yearsthereafter

Such a scenario would proveonce again not only thai theplayern in the bargaining loveour industry, but also that theylove this country

Wdllam ] DetweilerContributor, USMX ReportpresldenL P~D ConsultingRetlre~ Maritime ~dustrywIImdlwlr~aoI com

PA G E 7

Cell Phones forSoldiers in 2009In an effort to provide supportto US troops stationed overseas,the staff of USMX will be collecting old cell phones, Blackberrysand pDAs for donation to CellPhones Jor Soldiers, a charityfounded by teenagers Robbieand Brittany Bergquist fromNorwelL Massachusetts, with$2I of then own money The olddevices are sent to ReCellnlat~which pays the charity, for eachdonated device, enough moneyto provide an hour of talk time t,soldiers abroad

The 501c3 non ptx~fit has raisedalmost $2 million in donationsand has distributed more than500,000 prepaid calling cards tos o l d i e r ~ s e l V l r t ~ o v e r s e a s

Through increased fundraisingefforts, the Berquist lamily hopesto raise mote than $9 million inthe next four years to ~nd newprog~ ares, such as providingvideo phonen with prepaidservice to all soldiers abroad tosee then tamilies on a regularbasis

Please send yore old cellphonan, Blackberrys and pDAsto USMX headquartern We willcollect them and send them tothe chanty on behalf of USMXThank you for your assistance

[ ] R E P O R T PA G E 8

How to Contact USMX

USMX Website www.asmx.com

Mailing Addresses

USMX, LTD. USMX, LTD.485 Route I South 7 East Congl ess StreetBuilding C, Suite I00 Suite 502I~elin, N508830 Savarmah, GA 31401FAX: 73~7504J587 FAX: 9 I~3~1174

E-Mail Addresses Phone Numbers

James A. Capo 732404-2961Chairman & CEOjcapo@usmx corn

Ole A. Sweedl tmd 732404-2962Executive Vice President & COOo s w e e d l u n d ~ u s m x c o r n

Br ian E. Dugam 732404-2963Vice President, Labor Relatioi~ ~bdugan@usmx tom

Thomas p. Sullivan 732404-2964Director, Labor Relatioi~tsullivan@usmx corn

Beth Monica 732404-2965Corporate Secretary/Executive Assistantb m o n i c a ~ u s m x c o m

Kim Perez 732404-2966Administrative Ass~tantkperez@usmx tom

Roberla Beasley 912-236-1055South Atlantic District Contract Adrninistratott beasley@usmx corn

Candace Love 912-236-1055Sect~tatN, South Atlantic Dishictd o v e @ l I S I I / X C o m

2009 Database /Websi te Upda tesTo ensure t t la t your contact in format ionfor our LISMX membership l lst databaseand website is up-to-date for 20(29,please e-mall your current contactinformation: t lame, t i t le, company name,mail ing address Of you have a PO Box,please send us your physical addressalso tor overnight del ivery of importantUSMX communicat ions) , phone number,fax number, and e-mail address to BethMonica by January 30, 2009

E - M a i l D i s t r i b u t i o n L i s t sMos t commun ica t ion f rom USMX w i l lcome to you v ia e-mai l I f you requireother members of your company to becopied on e-mai l communicatmns,please e-mail the name/e-mail addressto Beth Monica for inclusion on theUSMX e-mar l d is tnbutmn l is t

Happy Holidays ITom All of Us atUnited States Maritime Alliance[