The Port of New York and New Jersey, the largest port on the U.S. East Coast, is preparing for a potential strike by the International Longshoremen’s Association (ILA), the biggest union for maritime workers in North America. With the ILA representing over 85,000 port workers, a strike would have significant implications, potentially shutting down 36 ports along the East and Gulf Coasts, affecting nearly half of all U.S. imports.
Negotiations between the ILA and the United States Maritime Alliance (USMX), which represents port ownership, have stalled, leaving port executives bracing for disruptions as the October 1 deadline for a new contract nears. This potential strike threatens to shut down five of the 10 busiest ports in North America, impacting billions of dollars in trade and sending shockwaves through the logistics industry. The ILA’s unanimous authorization to strike reflects a heightened sense of urgency, with the union seeking a resolution on wages and automation concerns.
Beth Rooney, the Port Director of the Port Authority of New York and New Jersey, confirmed that preparations for a potential work stoppage are underway. Ocean carriers and terminal operators are already adjusting operations to manage cargo movements, aiming to avoid a pileup of containers should the strike occur. Measures include embargoing export cargo from the Midwest and other distant locations, ensuring that freight is either rerouted or delayed to prevent congestion. In the event of a strike, ships may be required to wait in designated areas or slow steam, a tactic used during the Covid-19 pandemic to manage delays.
Currently, an estimated $34 billion in freight is en route to these ports aboard 147 vessels, making the timing and impact of this potential strike critical. According to data from Kpler, these vessels include a mix of container ships and roll-on/roll-off vessels with a combined carrying capacity of over 686,000 twenty-foot equivalent units (TEUs). With 38 of these vessels headed to the Port of New York/New Jersey alone, any disruption could have far-reaching effects on supply chains across North America.
The Biden administration has urged both parties to return to the negotiating table, emphasizing that it will not use the Taft-Hartley Act to force union members back to work. This stance has only intensified concerns, as ILA President Harold Daggett indicated that members would slow down work if forced to return, further exacerbating supply chain issues.
In response to the potential strike, ports like Houston and Georgia are implementing contingency plans. The Port of Houston has prepared strike guidance for its customers, indicating that it may extend gate hours and open on weekends to handle any potential backlog. The Georgia Ports Authority has advised clients to expedite imports before October 1 and has outlined specific timelines for handling exports.
The ripple effects of the potential strike extend beyond U.S. borders. Jim Mancini, Vice President of North American surface transportation at C.H. Robinson, noted that supply chains across Europe, Oceania, Latin America, and Asia could face disruptions, particularly in the automotive sector. European automakers, heavily reliant on East Coast ports, may face significant delays, as only two container service loops currently operate between Europe and the U.S. West Coast.
Logistics companies are already preparing for the worst. Firms like Seko Logistics have begun rerouting containers to the West Coast, while others, such as DHL Global Forwarding, are diversifying client routes to minimize disruptions. The Port of Long Beach in California has reported a surge in activity, with August marking its strongest month in its 113-year history, as businesses prepare for a potential East Coast shutdown.
The last time the ILA went on strike was in 1977, a 44-day standoff that saw members traveling to the West Coast to ensure solidarity among port workers. As talks remain at an impasse, fears of a supply chain slowdown are mounting. Sea-Intelligence estimates that even a one-day strike could take five days to clear, while a two-week strike could cause slowdowns extending into January.
With billions of dollars and the livelihoods of thousands of workers hanging in the balance, all eyes are on the ILA and the United States Maritime Alliance as they attempt to navigate this critical juncture in U.S. maritime history.
Source:CNBC
