The likelihood of a strike across US East and Gulf Coast ports is growing, as negotiations remain deadlocked and the government has refused to invoke the Taft-Hartley Act, which could delay the strike.
Instead, the White House has encouraged both sides to continue negotiations, raising concerns over significant disruptions to the global supply chain.
The International Longshoremen’s Association (ILA) has rejected the latest wage offer from the United States Maritime Alliance (USMX), citing dissatisfaction with wages and unpredictable working hours.
According to US Federal Maritime Regulations, any increases in ocean freight rates or surcharges must be communicated to the market at least 30 days before taking effect. With the potential ILA strike looming from 1st October, the first ‘Emergency Operations Surcharge’ (EOS) notices were issued on 1st September. These apply to shipments from Europe to the US east and Gulf coasts, with some also extending to ports in the Caribbean, Mexico, and Canada.
Most major shipping lines have now released EOS and strike intervention surcharge notices, with implementation dates between 1st and 19th October. The surcharges vary, ranging from USD 800 to 2,400 for 20-foot containers and USD 1,600 to 3,000 for 40-foot containers. These early announcements highlight the potential for significant rate increases should the strike proceed as expected.
The full effects of a strike may not be felt immediately, but analysts warn that a prolonged port closure could have wide-reaching consequences. Disruptions to vessels arriving in early October could delay shipments from Asia by up to seven weeks, potentially affecting pre-Chinese New Year exports. For US exporters, particularly in the automotive and agricultural sectors, an extended strike could lead to inventory shortages, production slowdowns, and even temporary plant closures.
With ripple effects across the supply chain, rising freight costs, and widespread delays, the impact of any strike is expected to last well into the final quarter of 2024. Shippers and carriers are bracing for a challenging period ahead, with ongoing uncertainties surrounding the outcome of labour negotiations.
To mitigate the impact of a strike, we have contingency plans for rerouting cargo through Canadian ports or opting for air freight as an alternative.
For shipments arriving at East Coast ports in late September, we will clear goods and return empty containers to avoid per diem charges before the strike deadline. However, trucking capacity is expected to become increasingly scarce in the lead-up to the strike, adding further pressure to logistics networks.
To ensure your supply chain remains robust in the face of these disruptions, we recommend contacting us for tailored solutions that safeguard your ocean freight operations. Our team is equipped to offer proactive strategies, secure capacity, and provide the best possible rates during this turbulent peak season.
For more information, please EMAIL us to discuss how we can help mitigate these challenges.
