Despite preparations at many port facilities, major industries and government officials in the U.S. are urgently calling for East Coast and Gulf Coast dockworkers and their employers to avoid a strike this week. This potential labor action could significantly impact the national economy. The Port Authority of New York and New Jersey highlighted ongoing coordination with supply chain partners and urged both sides to reach an agreement to keep goods flowing.
The International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) have not planned negotiations before the contract expiration, paving the way for a possible strike. President Joe Biden stated he would not intervene in the dockworkers' strike, emphasizing that resolving the dispute is a matter of collective bargaining. The ILA plans to provide updates on Monday, stating solidarity with dockworkers and maritime workers globally.
A strike could halt container and automobile shipments at ports handling half of the nation's trade, although exceptions will allow military supplies and cruise ships to pass. In an effort to resolve the deadlock, the Biden administration has called employer organizations to meet at the White House and urged the resumption of negotiations. The administration also plans to monitor shipping fees and surcharges to ensure fair competition.
This potential strike is the first major labor unrest at U.S. maritime hubs since the 2014-2015 West Coast port slowdown, with possible economic losses estimated at $7.5 billion per week. The last East Coast ILA strike occurred in 1977. USMX accused the ILA of refusing to negotiate since June and requested intervention from the National Labor Relations Board to compel negotiations. The ILA is focused on ensuring automation does not reduce jobs and seeks increased benefits from the shipping companies' recent profits.
Analysts caution that even a brief strike could be costly for retailers, manufacturers, and importers, especially in the fourth quarter. Supply chains are near full capacity, and any delay could cause backlogs. CH Robinson Worldwide Inc., a major U.S. freight broker, warned that alternate routes could quickly become overwhelmed, challenging the rail services with increased reliance on trucks and transshipment services.
East Coast and Gulf Coast ports are crucial for handling raw materials such as copper, cotton, tin, and lumber, as well as various metals used in manufacturing. The automotive industry could also be affected, although only a portion of vehicles and parts are imported through the threatened ports. Ports are preparing to scale back operations, with some extending cargo pickup times and others planning to reduce or stop operations on Monday.
Shipping rates are rising as the strike threat intensifies, with limited alternative routes leading to potential vessel idling, delivery delays, and increased costs. Montreal's port workers also plan a three-day strike starting Monday, impacting major terminals. Mediterranean Shipping Company (MSC) warned clients of potential booking adjustments and announced a $3,000 "emergency operations surcharge" per 40-foot container starting October 27. Similarly, AP Moller-Maersk A/S announced surcharges effective October 21. Hapag-Lloyd, the world's fifth-largest container shipping company, also warned of rising shipping costs due to increased demand for alternate routes and services.
However, Wells Fargo economists suggested that concerns about the strike's impact might be exaggerated. They noted that inventory levels have been replenished and political resistance to government intervention might lessen as the strike progresses. They believe that disruptions are typical in the global shipping industry and companies will manage through the situation.
