Strike on US East Coast could disrupt global shipping
Oct
A potential strike at US East Coast ports could disrupt the global shipping industry, with lengthy recovery times creating major challenges for supply chains and freight rates.
The potential strike at all US East Coast and Gulf Coast ports is expected to cause severe disruptions in the global supply chain, creating major problems for shipping stakeholders around the world.
As operations at 36 major US ports – which handle 40-50% of the country’s imports and exports – face the possibility of shutdown on October 1, the global shipping industry is under strain.
“If the strike goes ahead, we have reason to expect negative impacts on shippers shipping goods to the United States,” said Han Deng, a transportation partner at law firm Reed Smith. “Not only is there a potential increase in shipping costs, but we also expect this to impact retailers’ ability to meet demand for the holiday shopping season in the United States.”
Notably, in 2023, a single day of closure of US West Coast ports caused three weeks of delays, with storage times increasing by as much as 148%, according to supply chain platform Project44. Reports suggest a potential East Coast strike could last longer, possibly several weeks. Project44 estimates that recovery could take four to six weeks for each week of port closure. Similarly, Danish data firm Sea Intelligence predicts that a single day of strike action by the International Longshoremen’s Association (ILA) of America would take five days to recover.
“The impact of such a strike could linger even after it is resolved, with the disruptions mentioned taking weeks or months to restore, in a highly inflationary economy with regional conflicts and geopolitical instability,” Mr. Deng commented.
With peak shipping season already underway, Project44 analysts say it's too late to divert cargo volumes to the West Coast, jeopardizing holiday season inventories and prices.
Deng also noted that the Port of New York & New Jersey would be one of the ports most severely affected by the strike. According to the nonprofit research organization Mitre, the major U.S. port could lose about $640 million a day.
“It’s no surprise that the Port Authority of New York & New Jersey is trying to ramp up operations as much as possible ahead of the deadline,” the transportation attorney pointed out. “This includes encouraging shippers to deliver as much cargo as possible and coordinating with supply chain partners.”
According to the port authority, about $240 billion in goods are transported through the port each year.
“As we have seen with major port delays, supply chain disruptions, delayed shipping schedules, and altered shipping routes in recent history, such as the global Covid-19 pandemic and the Baltimore Bridge collapse in March 2024, the same will happen again,” the attorney said.
While it is difficult to make direct comparisons between periods, it is worth noting that the last ILA strike on the US East Coast in 1977 brought ports to a standstill for 44 days.
Source: Phaata.com
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