Are you a business that relies on sea freight to move goods to the US? Be prepared for delays to your shipments.
On Tuesday 1st October 45,000 port workers began strike action, the first in nearly 50 years, as talks over a new contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance, (USMX) which represents 40 ocean terminals and port operators, broke down on Monday 30th September.
The walkouts are affecting ports along the entire East Coast of the United States, stretching from Maine to Texas. This labour dispute is likely to significantly influence the economy as goods cannot enter or leave the country, another blow to the coast which not long ago suffered the collapse of the Baltimore bridge.
More than a third of exports and imports could be affected by the strike and estimations on the cost to the economy vary between $7.5 billion a week to $4.5 billion a day according to Oxford Economics and J.P. Morgan in an article by Forbes
Other workers dependant on the ports, such as lorry drivers and warehousing, who keep supply chains moving will need to be furloughed and manufacturers will have to slow or halt operations as they experience delivery delays.
Industries most impacted by the strikes
Perishable goods such as food will be the first to be impacted. Foods such as bananas and chocolate are imported into the ports involved according to the Farm Bureau, who also highlighted that 14% of agricultural exports are shipped by sea in an article by the BBC.
Other industry sectors impacted by the strikes include:
- Clothing and footwear
- European carmakers
- Car parts
- Furniture
- Tobacco
- Tin
- Cotton
- Wood
This isn’t a full list and many other supply chains will feel the effect of the port closures.
How are logistics companies mitigating these strikes?
Companies and logistics firms have been preparing for these strikes by diverting shipments to West Coast ports. However in California the Port of Long Beach reported its strongest month in its 113-year history as retailers moved cargo ahead of these negotiations.
The ports on the West Coast will be unable to absorb all the cargo from the East and Gulf Coast hubs. Transporting cargo on trucks and trains from the West Coast to the East Coast could become a financial burden according to the NY Times.
Some carriers are considering offloading in Mexico or the Caribbean as alternative options.
Air cargo rates between China and North America have already been elevated to peak season levels because of e-commerce. Peak season demand is expected to increase in October so air capacity and rates will face additional pressure, according to Judah Levine Head of Research at Freightos Group.
Supply chains that rely on one mode of transport are vulnerable to disruptions. Just look at this last year alone with the ongoing challenges in the Red Sea and port disruptions in Singapore and Malaysia which suggests a new approach to supply chain planning is required.
How are we supporting you?
If you are currently moving goods to the states or are planning on moving goods by sea freight, we are working closely with the shipping lines to overcome the challenges this is creating.
“We have strong relationships with the major carriers and that will help to keep us ahead of any changes as the situation develops such as Vessel rotation changes and expected surcharges.
We have been advised that a limited number of US ports will be remaining open and we will do our best to utilise these when and where possible.
Where sea freight isn’t an option we have been working closely with our Aviate Air Freight team who are supporting our customers with alternative solutions to keep goods moving.”
Brendan Pickering, US Navigate Specialist
Are you looking for advice on shipping goods globally?
We have a team of Solutions Consultants here who are able to provide expert advice on creating supply chain efficiency and preparing you for disruptions to your operations.
For an in-depth consultation or support on your sea freight please contact our team through the form below and we will be happy to help.
