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Market Matters Blog           03/02 12:10
Great Lakes Nearly 88% Covered in Ice
Canadian National Railroad Reaches Last Minute Deal With Unifor
White House Sending U.S. Labor Secretary Perez to Referee Port Disputes
"Do or Die" for West Coast Labor Talks 
A Pensive Moment in the History of Pit Trade
Labor Dispute Gets Meaty
Industry Facing Shortage Up to 30,000 Drivers 
West Coast Ports Suffering Slowdowns, Work Stoppages 
Proposal Would Make Weekly Reporting Permanent
Railroads Getting Better Grades for Service

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Great Lakes Nearly 88% Covered in Ice

   OMAHA (DTN) -- Queen Elsa, the star of the Disney movie "Frozen," apparently 
paid a visit to the Great Lakes in February and left them nearly covered in ice.

   As of Feb. 28, the combined Great Lakes were nearing last year's March 6 
total of 92%. Three of the Great Lakes were up to 95% covered. According to the 
Great Lakes Environmental Research Laboratory (GLERL), Lake Erie measured 96% 
coverage, Lake Superior measured 95.3%, Lake Erie was 95.9%, and Lake Huron is 
at 95.82%. Lake Ontario, one of the deepest lakes compared to its surface area, 
has seen ice coverage ranging from 80% last week, to 69.3% on the March 1. Lake 
Michigan is currently at 72.2% ice coverage. The combined total of all the 
Great lakes makes this the second winter in a row that ice coverage exceeded 
80%. 

   George Leshkevich, a physical scientist with the Great Lakes Environmental 
Research Laboratory in Ann Arbor, Mich., was quoted in the Great Lakes and 
Seaway Shipping News saying that, "It's been pretty cold the last few weeks, so 
the lakes have more ice now than at this time last year." He said it was 
unusual to have two years in a row of extensive ice cover compared to previous 
years. He told the Duluth News Tribune that "We're seeing some real difficult 
shipping conditions on Lake Erie, with a lot of ridging in the central and 
south parts of the lake." 

   The severity of ice last year called for convoys of ice breakers to work 
through the ice, and many times the wind would close up the fresh path, causing 
ridges which had to "rammed" by the icebreaker. Overnight, the icebreaker would 
get caught in the ice and end up in the same position it was at 24 hours 
earlier. Leshkevich said that he traveled with the ice breakers in March 2014. 
"It was brutal. I had never seen it like that," he said. "A five-to-seven-day 
trip turned into 16 days."

   According to the USDA GTR, United States and Canadian authorities have 
scheduled the beginning of 2015 navigation season for the Great Lakes-St. 
Lawrence Seaway shipping system for March 27, a day earlier than last year. 
Last year, the first ship didn't pass through there until April 4 because of 
the severe ice coverage. A seaway spokesman said, "Last year when we opened, we 
saw limited activity given how expansive the ice cover was." He added it could 
adjust the opening date if necessary. "We will not open the season until it is 
safe to do so."

   The GLS Shipping News reported that Robert Lewis-Manning, president of the 
Canadian Shipowners Association, which represents ships that move through the 
Great Lakes and St. Lawrence River, said he expects this year's situation to be 
"as bad or worse than it was last year." There is concern that the lack of ice 
breakers may be a problem this year if the ice becomes worse. While the U.S. 
Coast Guard has seven, it relied on help from Canada's two icebreakers that 
were sent from the Artic and may not be readily available this season.

   As for the Port of Duluth, the ice breakers usually begin working on the 
port in early March. Last year, U.S. Coast Guard icebreaker Alder began 
operations March 4. The port's first oceangoing ship (saltie) of the 2014 
commercial shipping season did not arrive until early May 2014. The first 
saltie of the season was escorted in a convoy of ice breakers in order to make 
it to the port safely. Thunder Bay's first saltie arrived in port on April 28. 
The arrival of the salties is the "official" start to the grain-shipping season.

   WEST COAST PORTS RETURNING TO NORMAL?

   Most of the 29 ports affected by the nine-month labor dispute between the 
Pacific Maritime Association (PMA) and the International Longshore and Workers 
Union (ILWU) are almost at full production levels, but still face backlogs as 
they continue to catch up. Work resumed in full on Feb. 21 when both parties 
reached a tentative settlement, which is scheduled to be ratified sometime in 
March, but many believe that the backlogs could take up to three months to 
clear.

   "The challenge is going to be re-earning the trust of the shippers," Mark 
Hirzel, president of the Los Angeles Customs Brokers and Freight Forwarders 
Association, told the Long Beach Press-Telegram. "I know of a very large 
shipper that has moved all their cargo from Los Angeles and Long Beach and have 
sworn they're not coming back again," Hirzel said Friday. On Feb. 6, the Port 
of Long Beach sent DTN a statement by email in which Chief Executive Jon 
Slangerup stated that, "Business has already moved to other ports due to the 
congestion." 

   The Journal of Commerce reported that in a survey of 138 shippers, "65% plan 
to ship less cargo through U.S. West Coast ports this year and in 2016 after 
suffering from congestion delays. The percentage of shippers planning to 
permanently reroute some cargo away from the coast is nearly identical to the 
66% of shippers who said the same thing when they were surveyed by JOC.com in 
mid-December."

   A Midwest container broker told DTN via email, "We don't have a lot of 
options to bypass the West Coast for most of our Asia-bound exports. If I was a 
cotton shipper in Texas or a soybean or other shipper from Ohio or Missouri, I 
sure would be working hard on an East Coast option. Importers have better 
options as they have higher margins on finished goods, and the market for over 
65% of consumer goods is east of the Mississippi."

   He added that in his opinion, "This GOP congress should pass legislation 
making ocean ports equivalent with railroads and airports in terms of strategic 
importance and allowing federal intervention sooner than later." The law 
currently says they can only involve a federal mediator if both sides agree or 
wait for a strike/lockout and then invoke federal rules.

   Fred Klose, executive director of the California Agricultural Export 
Council, told the Press-Telegram, "The trade group hasn't calculated the 
economic hit to farmers caused by the port troubles, but some exporters 
switched to air freight, which caused prices of exported produce to rise in 
Japan. Prices rocketed through the roof; Japan couldn't get the products that 
they needed, so there's a lot of air freight going on."

   Mary Kennedy can be reached at mary.kennedy@dtn.com 
Follow Mary on Twitter @MaryCKenn

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Canadian National Railroad Reaches Last Minute Deal With Unifor

   OMAHA (DTN) -- West Coast dockworkers and their employers reached a 
tentative agreement Friday, according to representatives of both sides. 

   Late afternoon on Friday, Feb. 20, the Pacific Maritime Association (PMA) 
released a joint statement by PMA President James McKenna and International 
Longshore and Warehouse Union (ILWU) President Bob McEllrath, saying: "After 
more than nine months of negotiations, we are pleased to have reached an 
agreement that is good for workers and for the industry. We are also pleased 
that our ports can now resume full operations."

   The tentative agreement on a new five-year contract covering workers at all 
29 West Coast ports was reached with assistance from U.S. Secretary of Labor 
Tom Perez and Federal Mediation and Conciliation Service Deputy Director Scot 
Beckenbaugh. The PMA said the parties will not be releasing details of the 
agreement at this time. The agreement is subject to ratification by both 
parties.

   While all the ports resumed operations immediately, the Port of Oakland 
experienced some labor issues with the day shift on Feb. 22, resulting in the 
suspension of those workers. The port's website said while work resumed at the 
Port of Oakland the evening of Saturday, Feb. 21, it continued Sunday morning 
but then was suspended for the remainder of the day shift. "The issue is a 
labor-management dispute over break time. Labor has been requested for the 
Sunday night shift Feb. 22. It remains to be seen if the labor request will be 
filled or if operations will resume. Vessel operations -- with one or two 
exceptions -- will be suspended again Monday, Feb. 23." 

   The PMA issued a statement on the port's website saying: "An area arbitrator 
ruled that longshoremen affiliated with Local 10 of the ILWU conducted illegal 
work stoppages at the Port of Oakland, resulting in port operations being shut 
down during today's day shift. We will continue to address any future work 
stoppages by Local 10 through the grievance and arbitration process, and, if 
necessary, in court. It's hoped that the dispute will be settled in arbitration 
Monday." 

   Late Sunday evening, the port issued another statement saying "vessel 
operations have resumed this evening at the Port of Oakland. Five vessels are 
being loaded and unloaded. Another three are scheduled for operations. Some 
requested jobs have gone unfilled."

   The Journal of Commerce said, "The tentative coast-wide contract agreement 
that was reached Friday evening by the International Longshore and Warehouse 
Union and the Pacific Maritime Association is just the beginning of a long 
process West Coast ports must endure to recover from the backlog of containers 
and vessels, and to restore trust among shippers." A Midwest container shipper 
told DTN via email it will "take months to sort this mess out."

   CANADIAN NATIONAL RAILWAY, UNIFOR AT IMPASSE IN NEGOTIATIONS

   On Feb. 18, the Canadian National Railway Company (CN) announced on their 
website "locomotive engineers and conductors working on the company's Northern 
Quebec Internal Short line ratified a new collective agreement. The employees 
are represented by the Teamsters Canada Rail Conference (TCRC) union." The 
four-year agreement provides wage increases and benefit improvements to 93 
employees.

   However, another union, Unifor, which represents approximately 4,800 CN 
employees in mechanical, intermodal, clerical and other areas of the company's 
business in Canada has rejected the latest offer by the CN. Labor negotiations 
with Unifor have been going on for almost six months, and on Friday, the talks 
came to an impasse. Late Friday afternoon, the CN issued a press release urging 
the union to accept binding arbitration as "the best way to settle their 
outstanding contractual differences. Barring such an agreement over the 
weekend, CN will exercise its right under the Canada Labour Code to lockout 
Unifor's 4,800 members at CN at 2,300 hours, Monday, Feb. 23."

   As social media began to "throw stones" over the issue late Friday, @CN_Comm 
released a statement on Twitter saying, "To be clear, CN is not locking out 
@UniforTheUnion members yet. We are urging union leadership to sit down and 
negotiate a deal this weekend."  

   On Feb. 21, the CN issued another press release saying it was "disappointed 
with Unifor's recent claims that the company is not bargaining in good faith 
and is trying to force its agenda on the union through a lockout of the union's 
4,800 members."

   "If Unifor believes it is advocating the right deal pattern, then the proper 
forum to get a fair hearing for such a deal pattern is binding arbitration. An 
independent arbitrator can consider all the facts impartially and decide in 
fairness what terms are most in line with the interests of CN employees 
represented by Unifor." Here is a link to the entire Feb. 21 press release: 
http://goo.gl/fyGXT4

   The two sides did get together on Sunday, Feb. 22, for several hours in 
Ottawa with officials of the government's Federal Conciliation and Mediation 
Service, but were unable to negotiate all terms of a new contract. However, the 
two parties will meet again Monday, Feb. 23, morning in Ottawa to resume 
collective bargaining.

   In a press release late Sunday, the CN said: "In the absence of a negotiated 
settlement or agreement on binding arbitration by Monday evening, CN will 
deploy its labor contingency plan, with trained management personnel safely 
performing the work of Unifor members, to protect service to the best of its 
ability. CN has begun to advise its customers in Canada of that possibility."

   On Monday, Feb 23 with the deadline approaching, the CN negotiated a 
tentative labor agreement with Unifor. In a press release on their website, 
they said, "As a result, CN has withdrawn its lockout notice to Unifor, which 
would have come effective at 2300 hours local time tonight in the absence of a 
settlement. Details of the tentative agreement are being withheld pending 
ratification by Unifor members. The union is expected to announce the results 
of the ratification vote in the next three weeks."

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow Mary on Twitter @MaryCKenn

    

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White House Sending U.S. Labor Secretary Perez to Referee Port Disputes

   OMAHA (DTN) -- Talks between West Coast dock workers and employers have 
stalled and the White House will be sending U.S. Labor Secretary Thomas Perez 
to referee the disagreement. However, some industry watchers say it's too late 
as some shippers make plans to move away from West Coast ports to other venues.

   Union workers are suspected of launching deliberate work slowdowns at West 
Coast ports and on Feb. 11, the employers' group, the Pacific Maritime 
Association (PMA), announced suspension of four days of premium-pay weekend and 
holiday vessel operations -- Feb. 12 (Lincoln's Birthday); Feb. 14; 'Feb 15; 
and Feb 16 (Washington's Birthday). 

   Here is the link to the entire PMA press release: http://goo.gl/JlUibA

   Robert McEllrath, president of the International Longshore and Warehouse 
Union (ILWU), told the New York Times the employers were deliberately making 
the congestion crisis worse to gain leverage at the bargaining table.

   PMA spokesman Wade Gates said, "Last week, PMA made a comprehensive contract 
offer designed to bring these talks to conclusion. The ILWU responded with 
demands they knew we could not meet, and continued slowdowns that will soon 
bring West Coast ports to gridlock. What they're doing amounts to a strike with 
pay, and we will reduce the extent to which we pay premium rates for such a 
strike."

   According to the PMA press release, one of biggest issues right now is a 
demand by the union to have the right to fire any arbitrator who rules against 
them at the end of each contract period, even though those arbitrators are the 
mediators who keep West Coast ports operating smoothly. The PMA said that, 
"During the 2008-2014 contract period, the four area arbitrators found the ILWU 
guilty of more than 200 slowdowns or work stoppages." The PMA said allowing 
this demand to be met could "cripple the West Coast waterfront."

   A Midwest container broker with customers on the West Coast told DTN on 
Friday, "The situation is now unsustainable; there will either be a 
breakthrough and a tentative agreement which will keep in place the current 
situation until ratified and signed. Even still, once the Union starts working 
at full capacity it will take three to four months to clean up the mess. Or, 
there will be a strike or lockout, then after a week Taft Hartley will be 
invoked, forcing them to go back to work and negotiate, which will get us back 
to the current stalemate essentially until they work something out.

   "In my opinion," he said, "the ILWU realizes that importers will be using 
the West Coast less in the future due to the increase in Canadian port 
productivity, more direct via Suez shipping to East and Gulf Coast -- 65% of 
the consumer market is east of the Mississippi I think, if not more -- the 
wider Panama, and the new Mexican port and rail connections. I think they are 
going for it all now as they know the long-term outlook for the West Coast work 
load is not good." 

   One sign of that became apparent on Feb. 10 when Hanjin Shipping Co. 
withdrew officially from the Port of Portland saying their last day will be 
March 4. According to The Oregonian, shipping companies that work with Hanjin 
received a letter saying Portland had been dropped as a stop for container 
ships and Portland would only be serviced by truck and rail via the Seattle 
port. The Oregonian noted that Hanjin ships account for 78% of the business at 
Terminal 6, moving 1,600 containers per week. Those shipments moved most Oregon 
agricultural exports to Asia, and brought apparel for Northwest-based companies 
like Nike and Columbia Sportswear in and out of the country and generated $83 
million annually.

   In a Feb. 11 article, the Associated Press reported that Hanjin's pullout 
isn't a surprise. In recent years, the company has been unhappy about the pace 
of work among longshore workers and announced its intention to withdraw two 
years ago. "If you are in Portland you should know why. Can't afford the 
expense of operating there. Simple," said Mike Radak, senior vice president for 
Hanjin USA.

   Late Saturday evening on Feb. 14, the Wall Street Journal reported the White 
House said it would intervene in stalled labor talks at West Coast ports, 
sending the labor secretary to meet with both parties and urge them to complete 
a new contract and avoid further slowdowns. "Out of concern for the economic 
consequences of further delay, the president has directed Secretary of Labor 
Tom Perez to travel to California to meet with the parties to urge them to 
resolve their dispute quickly at the bargaining table," White House spokesman 
Eric Schultz said in a statement. 

   There are some who feel that the White House has good intentions, but it may 
be too late to solve the differences between the two groups. The National 
Retail Federation told the WSJ it hopes Perez can recommit the two sides to 
reaching a deal. "The slowdowns, congestion and suspensions at the West Coast 
ports need to end now."

   MIXED RESULTS IN CANADA'S CP, CN RAILROAD LABOR NEGOTIATIONS

   The Canadian National (CN) railroad went into this weekend facing potential 
strike action from two unions representing the company's employees. DTN 
Canadian Grain Analyst Cliff Jamieson said thanks to an agreement with Unifor, 
the union representing about 1,800 CN safety and maintenance workers was struck 
just prior to the deadline. "CN Rail reports that a tentative agreement has 
been reached between that company and the Teamsters union, with will be voted 
on in April and negotiations with Unifor continue," said Jamieson.

   "At the same time, a deal between the Canadian Pacific (CP) and the 
Teamsters Canada Rail Conference was not reached, which meant that 
approximately 3,300 engineers and train workers went on strike as of 12:01 a.m. 
on Sunday morning." Jamieson added, "The strike may not be a long one. On 
Friday, the Canadian government paved the way for introduction of back-to-work 
legislation that will likely be introduced on Monday. The Globe and Mail 
reports that the last time CP workers walked off the job in 2012 estimates 
pegged the potential damage to the Canadian economy at $540 million/week. The 
current strike will see close to 20,000 commuters impacted on three commuter 
lines in Montreal which will place further pressure on government to intercede."

   "The current labor dispute comes at a time when both railroads are behind in 
spotting cars for grain movement. The most recent statistics suggest both 
railroads were behind 17,701 cars as of week 24, or the week ending January 18. 
Of this total, 7,732 cars are CN, while a further 9,969 cars are CP. This 
volume represents 10% of total demand with 46% of this total have been 
outstanding for more than four weeks."

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary on Twitter @MaryCKenn

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"Do or Die" for West Coast Labor Talks 

   OMAHA (DTN) -- In an effort to end the nine-month-long contract dispute with 
the International Longshore and Warehouse Union (ILWU), the Pacific Maritime 
Association (PMA) announced Feb. 4 that they had made an "all-in" contract 
offer that would significantly increase compensation to the members of the ILWU.

   "Our members have shown tremendous restraint in the face of ILWU slowdowns 
that have cut productivity by as much as 30, 40, even 50%," PMA President Jim 
McKenna stated in a press release. "This offer puts us all-in as we seek to 
wrap up these contract talks and return our ports to normal operations." 
McKenna told Associated Press that he wants to avoid a coast-wide port 
shutdown, but employers won't keep paying workers who aren't moving cargo at 
their normal rate if the ports become much more gridlocked.

   The Wall Street Journal reported that on Feb. 5, the ILWU circulated photos 
of empty yards at the ports. ILWU President Robert McEllrath said in a 
statement accompanying the photos, "PMA is leaving ships at sea and claiming 
there's no space on the docks, but there are acres of asphalt just waiting for 
the containers on those ships, and hundreds of longshore workers ready to 
unload them."

   Late Friday, Feb. 6, the PMA announced that weekend vessel loading and 
unloading operations would be temporarily suspended over the weekend at all 29 
West Coast ports. They said that yard, rail and gate operations were continuing 
at terminal operators' discretion.

   The PMA said that vessel operations are scheduled to resume Monday, Feb. 9. 
"Yard operations -- that is, moving processed containers for truck and rail 
delivery to customers -- will continue at terminal operators' discretion, 
although the ILWU continues to limit operations by withholding the needed crane 
operators or operating slowly."

   In a press release received by DTN from the Port of Long Beach, Port of Long 
Beach Chief Executive Jon Slangerup issued the following statement on the labor 
issue: "The Port of Long Beach isn't a direct party to the negotiations, but we 
again urge the PMA and ILWU to quickly resolve their differences so all the 
West Coast ports can focus on clearing the growing backlog of cargo."

   "The PMA and ILWU are vital partners in an industry that here in Southern 
California employs more than 500,000 workers -- in and outside the ports. 

   "Business has already moved to other ports due to the congestion. It's 
critical that we stop the hemorrhaging. This region simply can't afford to lose 
jobs because of cargo heading elsewhere."

   The Port of Los Angeles Executive Director Gene Seroka told the Wall Street 
Journal that containers are stacked about six high at the Port of Los Angeles. 
"If a labor deal is reached and other solutions are implemented, it could take 
about eight weeks to get the port back to normal," he said.

   In the meantime, refrigerated beef and pork, poultry, apples, frozen and 
dehydrated potato products and frozen vegetables wait for shipment in the hope 
there is no spoilage. The delays to shipping those products and more are 
costing industries hundreds of millions of dollars in lost sales, according to 
news reports. A container shipper in the Upper Midwest told DTN that fresh 
produce waiting for shipment late last year did spoil and had to be destroyed.

   Shippers who move containers of ag products from the Midwest are frustrated 
and have told DTN that their businesses are at risk of losing key customers 
because of the ongoing dispute. One shipper told DTN that he is angry and feels 
helpless that there is nothing he can do but watch and wait and lose customers.

   The Seattle Times reported that stakeholders in port operations have been 
pleading for President Barack Obama to step in since port slowdowns first 
started in late October 2014. After Friday's announcement, the Times said that 
"politicians and associations across the country urged for the president to 
step in."

   The administration's only statement on the issue came at the end of November 
2014 when the president said he was confident both sides could reach a deal 
"through the time-tested process of collective bargaining."

   The PMA noted that despite four weeks of help by a federal mediator, the 
parties have not yet been able to "bridge the considerable gaps between them." 
On top of that, the union recently added significant new demands, with the most 
significant being that the union wants to change the decades-long process for 
selecting arbitrators. The PMA said the union is "trying to change the rules on 
the waterfront in their favor, giving them the ability to unilaterally remove 
arbitrators who rule against them." 

   McKenna, speaking at a news conference said that without the arbitration 
process in place, the ILWU would call the shots and employers would be 
powerless to stop the slowdowns. "Some might wonder how the union was able to 
take such unilateral actions to cripple the West Coast ports. The short answer 
is, because they can," he said.

   Here is a link to the entire press release and PMA offer: 
http://goo.gl/zSiui1

   Mary Kennedy can be reached at mary.kennedy@dtn.com 
Follow Mary Kennedy on Twitter @MaryCKenn

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A Pensive Moment in the History of Pit Trade

   The trading pits are about people. They can be emotional, brash, full of 
fury and glory. They're a noisy, rambunctious fraternity in octagonal 
organization, or so I've been told. The movie "Trading Places" is older than I 
am, and by the time I started writing about agriculture, electronic trade had 
already become the norm. And while I didn't witness pit trading at its height, 
I love hearing the stories people have to tell. It's an end of an era I barely 
knew, yet I appreciate its loss because of the stories I've heard. 

   It's sad to say that everyone saw it coming. Sooner or later, the pits would 
close. But now that we know most trading pits in Chicago and New York will go 
dark on July 2, it's like we just put open outcry trade in hospice care. No 
matter how prepared we were for this moment, it was bound to provoke pensive 
thoughts and a walk down memory lane. It's simply how people process knowing 
they're going to lose something special, regardless of whether it's a loved one 
or a storied institution. 

   Perhaps one of the most honest reflections of this moment is from Jeffrey 
Carter, an independent trader, angel investor and former member of the CME's 
board of directors. With his permission, we're rerunning several excerpts from 
his recent blog post, "The End of the Pits," unedited. You can read the entire 
post here:  http://bit.ly/18SbP40. Please feel free to share your stories and 
thoughts in the comments section. 

   Excerpt One: 

   To those that don't know the business, the trading floor is the cultural 
heart and soul of an exchange. It's the beating heart.

   But, used correctly, the trading floor is also the brain. It's also the 
ethos, and the morality of an exchange.

   Of course, today most of the market is on the screen and electrified.

   Some people love electronic markets. Some hate them. What I will tell you is 
they aren't better or worse, but they are different.  That's not "good" or 
"bad" in a moral sense. They are just different.

   There are some realities that one has to grasp when looking at the trading 
business.

   First, the power brokers in New York (Big banks) have always hated Chicago. 
Prior to 1972, Chicago was small potatoes. Post the introduction of financial 
futures, Chicago was an international powerhouse. New York guys were jealous 
because they didn't think of it. They were pissed because a few thousand guys 
that didn't have prep school/fancy college degrees were beating the pants off 
them in the market every single day.

   Post demutualization, the power brokers were able to exert their influence 
over CME corporate structure to give artificial advantages to people that were 
not necessarily members of the exchange. Co-location, fee breaks, other perks.

   Some will say this was purely a fight between an old way of doing things, 
open outcry, and a new way of doing things, electronic trading. They aren't 
really correct. The members of the exchange voted to take the first two 
contracts of Eurodollars electronic under competitive threats from Eurex back 
in 2001. It took a few years before the entire contract made the jump to the 
screen. But, in fairness, CME marketing people were out on the street actively 
telling customers to go to the screen rather than the pit.

   The pit not only had advantages for traders, but many customers were 
advantaged by the pit too. You can't bitch about a fill on the screen and get 
it adjusted. You can't use a "tick" on the screen. There are no fat fingers in 
a trading pit.

   Excerpt Two:

   The floor was the place for dreamers. It was the place for entrepreneurs, 
because that's what independent traders really were. It was a place where a guy 
that never graduated from high school but had his wits about him, and a high 
appetite for risk could make a living. Some even got rich.

   The floor was a place for everyone and anyone. It was like America, 
democratic. All walks of life. All you needed was enough money to rent a seat 
and you were a trader. No special qualification or certification. No degree. 
Sure, there were cliques. It was clubby. Not everyone was ethical. Not everyone 
liked everyone else. There were fights. But, the floor reminds me of startup 
companies today.

   The floor was a constant vaudeville show. Colorful. Frenzied. Loud. Smelly. 
Smoky. It was on the run entertainment from 5AM to 4PM. Every day. Tourists 
would come like the zoo, stand behind thick panes of glass and point at the 
animals.

   The floor was an economic engine that built all of the cultural institutions 
in Chicago. All of them. They have roots in the floor. The banks that line 
LaSalle Street are here for one reason. Chicago would be nothing without its 
exchanges.  Fortunately we made the right choices in the late 1990's and 
Chicago still has its exchanges. The city and state would be in even worse 
shape without them.

   But maybe most of all, the floor was about hope. It was a place where you 
could realize some of your wildest dreams. You could go from electrician, cop, 
milk man, farmer, military, to wealthy trader. I think hope still exists on 
screens, but it's a lot different. Hope always works better when there are 
other people next to you supporting you.

   Today, it's almost impossible to start out as an independent trader on a 
screen and make it. If you want to really compete and become a high frequency 
trader, the startup costs are just too high. Frankly, to be an HFT trader, you 
better be a very skilled programmer and probability theorist as well-and be 
able to take some risk. The barriers to entry on trading are much higher today 
than they were back when I started.

   I left the floor a few years ago. I finally sold my last seat last year. So, 
I am not a shareholder, or a member of CME. But, I still have friends there 
that I think of. Even guys that I haven't spoken to in years. Some of the old 
Eurodollar ($GE_F) guys, the Hog ($HE_F) guys, and just people you'd see 
everyday.  The truth is, if you were a real trader and spent a long time there, 
a piece of the floor is always in you-and a piece of you will always be in the 
floor whether it's open or not. I am trying to start a new venture. Maybe old 
floor traders want to chat about it?

   When traders meet on the street, there is an instant comfort.  Floor trading 
had a code. Floor traders engaging in the "real world" have learned that the 
rest of the world doesn't live by that code. That's why lawyers stay in 
business.

   It's not a sad day that the floor is closing. What's sad is that the dynamic 
innovative energy from the floor isn't concentrated anywhere else. When you get 
a group of 3000 risk takers in one room, stuff happens. A lot of it fails, but 
a lot of it is quite successful. Remember, we had three trading floors full of 
crazies in Chicago. Not only things inside the exchange, but businesses outside 
the exchange too. The floor created a ton of value outside of trading. It was 
the greatest social network in the world. It was the original co-working space. 
 

******************************************************************************
Labor Dispute Gets Meaty

   By now, farmers are no strangers to labor disputes and disruption they cause 
in getting goods to the end user. But that doesn't mean it's any less 
frustrating or annoying. 

   A prolonged standoff between grain terminals and longshore workers in the 
Pacific Northwest simmered for years before it got so tense it scared off the 
grain inspectors. Shortly after and under political pressure, both sides 
reached a resolution. 

   Now the issue is with the large container ports on the West Coast, primarily 
in California. In short: The International Longshore Warehouse Union 
(represents workers at the ports) and the Pacific Maritime Association 
(represents 72 companies including terminal operators and cargo carriers) are 
negotiating a new contract. They've been at it for nine months without reaching 
a deal and have brought in a federal mediator. 

   The pace of shipments has slowed, goods are backing up at the ports, 
congestion is growing and the ramifications are being felt across the supply 
chain. On Monday, 80 Congressmen sent their third letter to both parties urging 
them to come to an agreement, but there's really nothing else Congress can do, 
a recent article in the Journal of Commerce (http://bit.ly/16ewZaH).

   More than 90 agriculture groups have also petitioned the two groups to come 
to an agreement in a letter of their own.

   "This regrettable situation is having a severe impact on our ability to 
export agricultural and food products to many of our main export markets," 
wrote the groups in the letter. "Inevitably, these overseas customers will look 
to other sources for their supply of these goods. Similar to what we 
encountered after ill-advised export embargoes in the past, once lost, a 
foreign customer can be difficult to recapture."

   A University of Missouri Extension economist warned that the slowdown could 
significantly affect meat exports, particularly to Japan. 

   "We exported about 21 percent of the pork, 10 percent of the beef and 19 
percent of the chicken produced last year," said Ron Plain, the economist. "In 
total, over $5 billion worth of meats went out through those ports last year. 
At the rate we're going, not near that amount is going to get shipped this 
year."

   Most of U.S. beef exports to Japan ship as the fresh, chilled variety. With 
the back up at the port, much of that beef will need to be frozen to keep it 
from spoiling, and Plain said that means a large dockage in its value. And if 
the U.S. can't meet the needs of Pacific Rim customers quickly enough, they may 
turn to other sources. 

   The port situation has also resulted in shortage of rail cars and 
refrigerated trucks, Plain said. There's also reluctance on the part of meat 
companies to send meat to the coast for shipping. "It is impacting the revenue 
that comes to packing plants, and therefore impacting what packing plants are 
willing to bid on livestock for slaughter."

   Plain noted the port dispute may also affect nut and cotton exports.

   "Even once an agreement is reached, it will take quite some time before 
backlogged product can be moved through those ports and we can get back to the 
normal shipping time."

******************************************************************************
Industry Facing Shortage Up to 30,000 Drivers 

   OMAHA (DTN) -- The U.S. trucking industry is seeing a shortage of 30,000 
drivers nationwide, said Truckload Carriers Association Safety and Policy 
Director David Heller in a recent interview with Wisconsin Public Radio.

   "It's an epidemic at this point," Heller told WPR. "Carriers aren't hauling 
freight not because they don't have equipment, not because they don't have 
freight; it's because they don't have the drivers to haul them." Heller went on 
to say that "the average driver is getting older, and that more technology and 
regulation is causing some of them to leave."

   The Federal Beige Book, a consolidated economic report from the 12 Federal 
Reserve Districts released on Jan. 14, 2015, reported that many districts are 
concerned about the freight transportation industry, particularly the trucking 
sector. The report is based on information collected on or before Jan. 5, 2015.

   The Atlanta District transportation contacts reported "slightly higher 
activity from late November through December compared with year-earlier levels. 
Trucking and logistics contacts noted significant increases in demand; however, 
capacity constraints due to a lack of drivers continued to hinder growth."

   The Richmond, Va., contacts throughout the district continued to cite 
difficulties finding skilled workers, specifically in truck driving. In the New 
York City area, a trucking industry expert reported that "while business 
conditions have improved substantially in late 2014, reflecting both strong 
demand and falling diesel prices, truck drivers are in high demand."

   The Cleveland District reported, "Freight volume increased since our last 
report, with demand being described as broad based. Profit margins improved due 
to lower diesel fuel prices. Hiring drivers is an ongoing process, and industry 
executives agree that their ability to attract and retain truck drivers is 
critical to their ability to expand capacity. Although capacity constraints 
remain an issue industry-wide, carriers are encouraged by amendments to the 
hours-of-service rules that were included in the recently passed federal 
omnibus bill."

   The hours-of-service rule required a restart of a 60-to-70-hour limit, which 
drivers were required to comply with beginning July 1, 2013. According to an 
article published by Bulk Transporter on Jan. 23, "The Federal Motor Carrier 
Safety Administration (FMCSA) announced in December that it had suspended 
enforcement of certain sections of the hours-of-service (HOS) rules, 
specifically the 60- or 70-hour rule, as required by the Consolidated and 
Further Continuing Appropriations Act, 2015, (also known as Cromnibus) enacted 
Dec.16, 2014."

   Sen. Susan Collins, R-Maine, is responsible for the Collins Amendment 
language, which, according to the article, "suspends restrictions on the use of 
the so-called 34-hour restart that requires drivers to take two consecutive 
periods of 1 a.m. to 5 a.m. off during the restart, thus pushing them into 
riskier daytime driving and then lifts the restriction on using the restart 
more than once every 168 hours, or one week."

   ATA President and CEO Bill Graves told the trade publication Bulk 
Transporter, "One of our members told us several of his drivers took four days 
off for the recent Thanksgiving holiday, yet when they returned to work, their 
hours were limited because that 96-hour break could not count as a 34-hour 
restart. That's just one of the impacts FMCSA failed to research that we hope 
they fully examine as a result of this congressional mandate."

   According to Bulk Transporter, the suspension of the restart rules will 
continue until the end of Fiscal Year 2015 (Sept. 30) or until the final report 
on the naturalistic study has been submitted to the House and Senate Committees 
on Appropriations, whichever is later.

   PROPOSED NEW RULES COULD PROVE COSTLY FOR INDUSTRY

   The National Grain and Feed Association reported that 2015 is poised to be a 
big year on the trucking front for the grain, feed and processing industry. On 
tap for the trucking industry this year is potential rulemaking at the FMCSA 
and Congress' need to pass a new highway bill before the old one expires May 31.

   The NGFA said, "The rulemaking under consideration at FMCSA would increase 
the minimum levels of financial responsibility for motor carriers (liability 
coverage for bodily injury or property damage), and would increase financial 
responsibility for freight brokers and freight forwarders. Currently, there is 
a minimum of $750,000 in financial responsibility for each for-hire interstate 
general freight carrier. FMCSA's research report on Financial Responsibility 
Requirements for Commercial Motor Vehicles estimates an insurance premium cost 
of $5,000 per truck per year for $750,000 to $1 million in coverage."

   In comments, which are due by Feb. 26, NGFA plans to ask FMCSA to consider 
the effect of any increase in financial responsibility on freight rates and 
prices received by sellers of agricultural commodities.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
West Coast Ports Suffering Slowdowns, Work Stoppages 

   OMAHA (DTN) -- The Pacific Maritime Association (PMA) and the International 
Longshore and Warehouse Union (ILWU) are still at odds over labor contracts, 
and the ongoing dispute is affecting service at several West Coast ports, 
according to trade sources. 

   A trade source told DTN via email that both sides are still blaming the 
other for the failure to reach an agreement. The source said the ports having 
the most problems are Oakland, Portland and Seattle/Tacoma. "LA/Long Beach is 
apparently better; Oakland is the worst and has been closed completely off and 
on."

   The PMA stated on their website in December that, "ILWU slowdown tactics 
have reduced productivity at Pacific Northwest ports for more than a month and 
a half, with drop-offs of 30-40% now the norm, according to PMA analyses of 
terminal operations. Intermittent walk-offs have also occurred in Oakland. At 
the ports of Los Angeles and Long Beach, the nation's busiest, the ILWU 
restricted dispatching skilled crane operators to operate yard cranes, among 
the most important jobs to relieve congestion on the docks."

   According to the PMA, the union actions are tied to the ongoing negotiations 
for a new coast-wide labor contract between container terminal operators and 
the ILWU. Negotiations began in May for the contract that expired July 1, and 
talks have been occurring almost constantly for the past six months. The 
contract being negotiated covers nearly 20,000 longshore workers at 29 West 
Coast ports. 

   In a press release on their website Jan. 15, the Federal Maritime Commission 
said that Chairman Mario Cordero announced to staff on Jan. 13 that his 
priority for the commission in 2015 is addressing congestion issues that are 
plaguing the nation's ports.

   Chairman Cordero stated, "Among the commission's statutory goals is the 
assurance of an efficient ocean transportation system. The efficient operation 
of the nation's ports is squarely within that mandate and paramount to the 
commission's responsibilities. As we move forward, I look forward to a thorough 
review of the issues and views that have been provided from various maritime 
industry stakeholders. The FMC will continue its role in protecting the 
shipping public and addressing unreasonable or unjust practices by carriers or 
marine terminal operators."

   On Jan. 5, Allison Beck, acting director of the U.S. Federal Mediation and 
Conciliation Service (FMCS), issued the following statement on the FMCS 
website: "In response to a joint request for assistance from the parties, 
collective bargaining between ILWU and PMA representatives will continue as 
soon as possible under the auspices of the Federal Mediation and Conciliation 
Service (FMCS). We are prepared and ready to render prompt assistance. Deputy 
Director Scot Beckenbaugh, a senior FMCS mediator with extensive collective 
bargaining experience in this industry, has been assigned to help the parties 
bring these important negotiations to a mutually acceptable resolution."

   The press release went on to say the FMCS will not release information 
regarding future meeting dates and locations. "In addition, the FMCS will have 
no further comment at this time regarding the status or substance of the 
negotiations."

   Earlier this month, the BNSF said on their website that the marine terminal 
operators at the ports of Oakland, Los Angeles and Long Beach had advised BNSF 
of their intentions to limit marine terminal labor calls to support their 
marine terminal operations. A similar action had also been done at Pacific 
Northwest marine terminals. 

   "In anticipation of further slow-downs and marine terminal congestion," the 
BNSF said, "we are issuing an embargo to be effective Monday, Jan. 5, 2015, for 
westbound traffic received at interchange points destined for all marine 
terminals served on the West Coast. The embargo was lifted Jan. 7, but the BNSF 
continues to monitor the ongoing labor issues at the West Coast terminals and 
has stated that they are encouraged by the participation of the FMCS.

   A container broker told DTN, "From what we hear, the main issue is 
maintenance of chassis. ILWU wants to have that job and income and work from it 
for their mechanics. The problem is that the shipping lines and terminals no 
longer own the chassis, so they have no say or legal right to give the 
maintenance to the ILWU. The contract is left to another union off the terminal 
site. It's a catch 22."

   "We are doing some business, but we easily passed on over 2 million in sales 
over the past 60 days. Some of that is lost, but some may come back to us. A 
lockout or strike keeps being rumored." 

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
Proposal Would Make Weekly Reporting Permanent

   OMAHA (DTN) -- Weekly service performance reports from railroads may become 
a permanent requirement following a recent decision by the Surface 
Transportation Board (STB). 

   On Dec. 30, the STB issued a proposal of new regulations for permanent 
weekly reporting by all Class I railroads and by the Chicago Transportation 
Coordination Office (CTCO). The current order requiring weekly service updates 
was on a temporary basis and had no expiration date.

   The weekly filings have allowed the board and rail stakeholders to monitor 
performance and have allowed the board to begin to develop baseline performance 
data. "Based on the board's experience with the reporting to date, the board is 
now moving forward with a rulemaking to determine whether to establish new 
regulations for permanent reporting by the members of the Class I railroad 
industry, the Class I carriers operating in the Chicago gateway, and the CTCO 
through its Class I members," the STB said.

   The permanent collection of weekly performance data would improve the STB's 
ability to "identify and help resolve future regional or national service 
disruptions more quickly, should they occur," the board said. "Transparency 
would also benefit rail shippers and other stakeholders by helping them to 
better plan operations and make informed decisions based on publicly available, 
near real-time data, and their own analysis of performance trends over time." 

   The entire STB decision can be found here: http://goo.gl/oY9DG8

   A second Dec. 30 proposal directs BNSF Railway Company to "submit a detailed 
description of the contingency plans the carrier would use to help mitigate an 
acute coal inventory shortage at one or more generating stations in a region." 

   With respect to BNSF and coal specifically, the STB stated, "Totality of the 
information collected to date suggests that BNSF's coal service has struggled, 
although there has been some progress in recent weeks." The board stated it is 
critical they continue to closely monitor BNSF's performance for indications of 
improving or deteriorating service.

   "In addition to monitoring BNSF's coal service performance via the data we 
collect," said the STB, "we will continue to hold regular meetings with BNSF 
senior management so that we can receive first-hand information about the 
challenges and progress BNSF is experiencing with respect to all service 
issues, including coal." 

   Here is the link to the entire decision by the STB concerning this issue: 
http://goo.gl/m5pGr7

   Comments and replies on both decisions may be submitted either with the 
board's e-filing format or in the traditional paper format. Comments are due by 
March 2, 2015. Reply comments are due by April 29, 2015.

   BNSF REPORTS COLD, SNOW, PNW LABOR DISPUTE HAVE SLOWED TRAFFIC

   Below-zero temperatures and blizzard conditions in the Midwest and Northern 
Plains required reduction of train lengths across the northern portion of the 
network last week, according to the BNSF website. The restrictions were 
expected to remain in place through the past weekend until temperatures return 
to more normal levels early this week.

   "Despite the harsh conditions, our team of over 300 rapid responders has 
helped keep the network running strong with just some minor weather-related 
delays," said BNSF. "In addition, we continue to experience strong performance 
gains due to additional locomotive availability and reduced post-holiday season 
volumes."

   The railroad also said it is continuing to manage service inconsistencies at 
ports in the PNW and California because of the ongoing labor dispute. Because 
of work slowdowns causing some disruptions, "temporary restrictions on 
export/import traffic were briefly instituted and subsequently withdrawn as 
volumes proved manageable," the BNSF website said. The U.S. Federal Mediation 
and Conciliation Service announced on Monday, Jan. 5 that it was "prepared and 
ready to render prompt assistance." The AP reported last week that pressure, 
both political and financial, has been mounting while each party faults the 
other for the sluggish movement of billions of dollars of cargo across the 
docks at 29 seaports that form a vital trade link with Asia.

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow Mary Kennedy on Twitter @MaryCKenn

    

******************************************************************************
Railroads Getting Better Grades for Service

   OMAHA (DTN) -- Freight customers are giving railroads better ratings on 
service, compared to a year ago, and observers report a slight decrease in oil 
cars spotted in the northern corridor.

   In the Soy Transportation Coalition's third bi-weekly rail service survey, 
78% of respondents said cycle times for railroads are faster than they were a 
year ago, according to USDA's weekly Grain Transportation Report. In 
comparison, the first survey showed 67% and the second survey showed 70%. 

   Although fewer rail customers reported past due orders, USDA said the survey 
showed "the average number of days past due for those that are experiencing 
delays increased from 13.4 days in the second survey to 30 days in the third 
survey."

   Besides good weather allowing faster speeds and more locomotives available 
to pull loaded cars, there has been a slight decrease in oil cars seen in the 
northern corridor. Up until just recently, most trains one would see moving 
along northern routes consisted of at least 75% or more 100-car oil trains. In 
the past few weeks, observers say oil cars are still moving, but there is more 
of a mix of grain, container, coal and oil cars in 100-car-units lately.

   It is unlikely there will be a significant falloff in volumes shipped out of 
North Dakota's Bakken oil field in the near term, a source who works for an oil 
and gas exploration service told DTN. The first reason is most large producers 
have hedged a majority of their production at prices close to or above $90.00 
and they need to make delivery on those contracted barrels, he explained. 
Second, numerous wells remain that have been drilled and cased, but are waiting 
on completion. From a cost-forward basis, these wells will meet economic 
hurdles and they will be completed over the next few or more months, the source 
said.

   "My guess is train-shipped oil volumes will not begin to decline until 
mid-year," he said, "unless Saudi Arabia allows oil prices to rebound before 
then. Even then, there will still be a lag as companies drop rigs, hence well 
count and oil volumes to ship also drop."

   RAILROAD REPORTS

   In its weekly update to the Surface Transportation Board (STB), The Canadian 
Pacific (CP) said, "Our U.S. network continues to be in good operating 
condition. Average dwell at origin for unit grain trains has improved, and 
grain loadings remain steady. Train speed has increased. With respect to the 
Rapid City, Pierre & Eastern Railroad (RCP&E), locomotives are in overall 
balance this reporting week, understanding that the number varies from day to 
day. We fulfilled 237 of 300 RCP&E grain car requests, which is an improvement 
over last week." Here is a link to the full Dec. 31 service update: 
http://goo.gl/VDz6He

   On Jan. 5, the Burlington Northern Santa Fe (BNSF) reported on its website 
that the shuttle turns per month for the PNW were slightly lower from one week 
ago at 2.4 TPM vs. the desired turn time of 2.5. Here is the weekly update by 
the BNSF to the STB on Dec. 31: http://goo.gl/yxd6Ve

   WEST COAST PORT ISSUES

   "We continue to monitor the ongoing labor situation at the West Coast 
ports," BNSF said on its website. "While negotiations between port operators 
and dockworkers continue, we are actively responding to changing conditions 
affecting both inbound and outbound shipments."

   The Pacific Maritime Association (PMA) released a statement on Jan. 2 citing 
current issues affecting operations and asking the International Longshore and 
Warehouse Union (ILWU) to stop withholding skilled longshore workers from their 
shifts on the docks, especially in Southern California ports. Here is the full 
press release from the PMA: http://goo.gl/3Msu3x .

   On Jan. 5, the Federal Mediation and Conciliation Service released a 
statement on its website announcing they will step in and help mediate 
negotiations. "In response to a joint request for assistance from the parties, 
collective bargaining between ILWU and PMA representatives will continue as 
soon as possible under the auspices of the Federal Mediation and Conciliation 
Service (FMCS). We are prepared and ready to render prompt assistance. Deputy 
Director Scot Beckenbaugh, a senior FMCS mediator with extensive collective 
bargaining experience in this industry, has been assigned to help the parties 
bring these important negotiations to a mutually acceptable resolution."

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow Mary on Twitter @MaryCKenn

******************************************************************************


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