Negotiations between the International Longshoremen’s Association (ILA) and the US Maritime Alliance have stalled for over a month, with President-elect Donald Trump voicing clear support for the ILA’s stance. With a potential strike looming on January 15th, it’s crucial to assess the cascading impacts this event could have, not only during the strike itself but also before and after.
The mere risk of a strike has already prompted some US importers to expedite shipments, frontloading goods to avoid potential disruptions. However, as January 15th approaches, the time to act is running out.
For shipments from Asia to the US East Coast, which typically take four to five weeks depending on the route, the window to avoid the strike has already closed. Alternative options, like rerouting cargo to the US West Coast, remain viable but are also rapidly narrowing due to transit times of two to three weeks. Similarly, for cargo originating in South America and Europe, the chance to adjust shipping plans is fading unless bookings are made immediately.
This surge in early shipments has also created increased pressure on warehousing, as goods arrive sooner than usual and in greater volumes than expected.
If the strike goes forward, vessels are likely to anchor outside major ports along the US East and Gulf coasts, as seen during the three-day strike in October. In some cases, cargo might be unloaded earlier than planned or redirected to regional hubs like Freeport or Kingston to keep supply chains moving.
However, the effects won’t stop there. Vessel delays mean ships won’t return to their points of origin on time, disrupting schedules in Europe and Asia. A lag of two to three weeks for Europe and four to five weeks for Asia could lead to significant reductions in export capacity. During the October strike, this disruption was manageable due to its short duration. A longer strike, however, could result in severe capacity shortages by mid-February in Europe and late February in Asia.
A protracted strike could extend the challenges well into March. Asian exporters, in particular, might face equipment shortages as empty containers from the US East Coast cannot be returned. This issue would compound during March, when global demand typically begins to rise following the Lunar New Year.
Adding to the complexity is the timing of the strike, coinciding with the rollout of new shipping alliance networks. This transition requires the reallocation of hundreds of vessels to new service routes. Any disruption to these plans could ripple across global trade lanes, including those not directly tied to the affected ports.
Every day of a strike could translate into roughly six days of congestion recovery for US East Coast ports. This estimate aligns with the impact observed during October’s brief strike. However, a longer strike would cause delays to pile up, creating extensive challenges for both importers and exporters.
With limited time to reposition cargo, importers and exporters must now turn their focus to encouraging a resolution between the ILA and the terminals. Negotiations that prevent a strike altogether would be the most effective way to mitigate these potentially far-reaching consequences.
Source: www.joc.com