Massive Cargo Backlog Emerges as an Impact of US Port Strike

U.S. East Coast and Gulf Coast ports have started reopening after a wage deal was reached between dockworkers and port operators, bringing an end to the industry’s largest work stoppage in almost 50 years. However, the process of clearing the cargo backlog left by the strike will take some time. The strike ended sooner than anticipated, causing shipping stocks in Asia to weaken as freight rates were no longer expected to surge. At least 54 container ships were queued outside the ports due to the strike, leading to potential shortages of various goods.

The International Longshoremen’s Association (ILA) workers union and United States Maritime Alliance (USMX) port operators reached a wage hike agreement of around 62% over six years, raising average wages to about $63 an hour from $39 an hour. This development caused shares in shipping companies in Asia and Europe to fall. The strike by 45,000 port workers, the first major work stoppage since 1977, affected 36 ports from Maine to Texas and was estimated to cost the U.S. economy around $5 billion per day.

Retailers, including Walmart, IKEA, and Home Depot, which rely on East Coast and Gulf Coast ports for about half of all container shipping volume, were impacted by the strike. The tentative deal on wages has ended the strike, but both sides will continue negotiations on other issues, such as the ports’ use of automation that workers fear will lead to job losses. The National Retail Federation welcomed the reopening of the ports, emphasizing the importance of reaching a final agreement for the benefit of American families and the economy.

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