Thousands of workers across the US East and Gulf Coast ports went on strike as the clock struck midnight on September 30th. The strike that officially began on 1 October is the first of this magnitude in the last 49 years and threatens huge backlogs and losses worth billions of dollars.
A total of 36 ports are affected by the strike; these include the ports of HOUSTON, MIAMI , and CHARLESTON among others. These ports together account for 57% of the US imports and exports; hence, the strike will be particularly dangerous for the economy and the supply chain should it last.
According to MarineTraffic AIS data 68 vessels, containerships and Ro/Ro vessels with a total capacity of more than 4.5 million GT, are expected to arrive until 6 October at the main ports affected by strikes. The heatmap above visualises their movements during the past three days filtered by their GT. It highlights areas with higher concentrations in green.
An estimated loss of $3.8 billion per week is expected due to increasing prices and shortages of goods in the approaching holiday season. Experts also warn of huge backlogs that would go well into 2025 to resolve.
The impact will not be felt immediately in the US, but shipping firms have already rerouted ships. Every day the strike continues, it causes about a week worth of delays and impacts across the global supply chain, said Sal Mercolgano, Maritime Historian at Campbell University.
The strike was looming on the horizon for a long time, with banter between the USMX and ILA getting intense near the end of the negotiation period. Due to this, retailers all across the USA have stocked up on goods as a buffer in preparation for the rush of the holiday season. However, perishable goods, such as bananas and coffee, along with clothing and automotive parts, are expected to be the first to face shortages. In addition to stockpiling goods, businesses have also resorted to rerouting their cargo through the West Coast ports; however, this still would not be enough to mitigate the damage should the strike last long.
The reason for the strike is the breakdown in the negotiations between the International Longshoremen Association (ILA) and the United States Maritime Alliance (USMX). The ILA, representing over 85,000 members across the US East and Gulf Coast ports, had been primarily demanding pay raises and job security as the older 6-year labor deal was expiring on September 30.
In the last 24 hours leading up to the strike, USMX and ILA exchanged offers, and the USMX offered a pay raise of 50% over the next six years, triple the employer contributions to the employee retirement plans, bolster healthcare options, and retain the current contractual provisions pertaining to automation and semi-automation on ports. ILA, however, rejected this offer, stating that the offer fell far short of their expectations, both in terms of offered wages and in terms of protection from the potential of automation taking their jobs.
Of particular importance is the fact that the strike is occurring in the politically charged atmosphere of the US presidential elections. The Biden administration has so far chosen not to intervene in the strike, deciding to uphold the bargaining rights of both the ILA and the USMX. However, the government is expected to invoke the Tuft Hartley Act should the strikes linger for long. The Tuft Hartley Act offers the federal government an option of intervening in labor disputes and preventing strikes for 80 days if the strike is deemed a threat to national health or safety.
Experts are divided on what the future holds in this tenuous situation, with some claiming that either the ILA or the USMC would cave within the first 24-72 hours while others predict a longer and more devastating duration to the strikes.
