Potential Longshoremen Strike Threatens US Port Supply Chains

The International Longshoremen’s Association (ILA) has halted talks with the United States Maritime Alliance concerning a new employment contract for longshoremen at U.S. East Coast and Gulf Coast ports, raising concerns about a potential strike that could worsen the already strained supply chains. The current contract is set to expire at the end of September. Peter Sand, the chief analyst at Xeneta, warned that the threat of a strike could prompt shippers grappling with disruptions in the Red Sea to expedite their imports, contributing to severe port congestion in Asia and Europe and significant spikes in ocean container spot rates exceeding $2,000 per FEU.

Recent data from Xeneta revealed a 64% increase in average spot rates from the Far East to the US East Coast since late April. Sand suggested that shippers may opt to use the U.S. West Coast for imports if disruptions on the East Coast escalate, although this could limit capacity and keep prices high for an extended period. The situation echoes last year’s lengthy wage negotiations on the West Coast between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU), which led to West Coast ports losing market share to the East Coast.

Sand warned that if no agreement is reached and strikes occur amid the ongoing pressure on sea freight container networks, the end of 2024 could prove extremely challenging. Shippers are advised to monitor the situation closely and consider potential alternative routes to mitigate the impact on their supply chains.

Source .