Looming Port Strike on US East Coast Raises Fear of Supply Chain Crunch

45,000 workers across 36 ports on US East Coast threaten strike on 1st October if labour talks fail


The looming strike by dockworkers at ports on the US East Coast and Gulf of Mexico on 1st October, in the event of failed labour talks, could disrupt the flow of goods into the USA, threatening supply chains across the country.

25,000 workers from the International Longshoreman Union (ILA), who together work across 36 ports on the US East Coast, ranging from New York & New Jersey to Savannah, Georgia have vowed to go on strike unless they can secure a new labour agreement.

Talks have been ongoing since May, between the ILA and the United States Maritime Alliance (USMX), but there have been stumbling blocks, namely that of pay and protection against the introduction of automation and new technology at the terminals.

New York & New Jersey is the US’s largest trading port with an estimated $375 billion flow of trade in 2023 according to ALPS Marine analysis.

Similarly, Savannah, Georgia is another key trading port for the US economy, handling $51 billion worth of goods in 2023, as calculated by ALPS Marine.

Goods travelling to and from Europe and India, which rely on direct routes across the Atlantic Ocean will be particularly hit hard by the strike.

Yet, the fear among many shippers and analysts alike is that once a strike is called, then the backlog could steadily rise across the country.

“The moment you close the door, things begin to back up”, said George Oldman, Chief Executive of CMA CGM North America, speaking on a webcast hosted by Port of Los Angeles, as cited in Reuters.

Many retailers, manufacturers and in turn shippers, are looking at alternative ways of avoiding being hit by the strike, with many diverting their cargo to the West Coast.

The West Coast trade is experiencing a boom in trade, with Long Beach registering its busiest month in its 113-year history in August, with a 34% increase in trade.

While a significant portion of this increase is driven by concerned retailers ordering in items to avoid having low stocks during key consumer shopping seasons such as Halloween and Christmas, there are other factors at work too.

Manufacturers are loading up on items such as solar panels that are being targeted for future tariff increases. The Biden Administration introduced a 100% tariff on Chinese EVs, 50% on Solar Cells and 25% on Steel, Aluminum and other key minerals that will take effect on the 27th of September.

Further planned tariffs are expected in 2025 including a 50% duty on Chinese semiconductors (including Silicon Wafers and Polysilicon used in solar panels).

It seems that a possible strike on the US East Coast could generate “the perfect storm” with significant, unknown impacts on the US economy and beyond.


Post Date: 23/09/2024

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