(Source – cnbc)
Executives at the Port of New York and New Jersey are bracing for a possible complete work stoppage by the International Longshoremen’s Association (ILA), the largest union in North America. With over 85,000 members, the ILA’s strike would result in a shutdown of five of the ten busiest ports in North America, as well as 36 other ports along the East and Gulf Coasts. The potential strike, scheduled for October 1, could have significant economic repercussions, affecting nearly half of the United States’ imports and billions of dollars in trade.
As the deadline for a new contract approaches, logistics firms are reviving contingency plans last implemented during the COVID-19 pandemic and the 2018 tariffs to mitigate the anticipated disruptions.
Strike Could Cripple U.S. Imports
A staggering 43% to 49% of monthly U.S. imports pass through the ports that would be impacted by the strike, meaning the economic consequences would be vast. Presently, an estimated $34 billion in freight is en route to these ports aboard 147 ocean vessels. With port operations expected to grind to a halt, companies across various sectors are already implementing strategies to manage the impending crisis.
Beth Rooney, the port director for the Port of New York and New Jersey, stated that shipping companies and terminal operators are scaling down operations to prevent a pile-up of containers at the port. Rooney also confirmed that steps are being taken to ensure cargo is removed from terminals before any potential strike begins. Ocean carriers have started embargoing export cargo arriving from the Midwest to avoid further complications.
While cargo can be delayed by slow steaming or waiting in designated areas during the strike, the backlog of containers is expected to exacerbate supply chain disruptions. According to maritime industry estimates, a one-day strike could take up to five days to clear, while a two-week strike would lead to congestion lasting well into January.
Economic and Global Implications
A strike would not only cripple U.S. supply chains but also have far-reaching global implications. Supply chains in Europe, Oceania, Latin America, and Asia would be affected, especially since East Coast ports handle a significant portion of automotive freight from Europe, particularly between Germany and ports like Charleston and Savannah. The labor strike could lead to severe disruptions for European automakers, which rely heavily on East Coast import channels.
As concerns over a work stoppage grow, transportation companies are shifting cargo to the West Coast to avoid delays. Ports like Long Beach and Los Angeles are preparing for an influx of cargo and are adjusting gate hours and overflow facilities to accommodate the additional volume. The Port of Long Beach experienced its busiest month ever in August, with imports surging 40% year-over-year, and is prepared to handle even more traffic should the strike occur.
Amid these preparations, the Biden administration has stated it will not invoke the Taft-Hartley Act to force the ILA members back to work. ILA President Harold Daggett has warned that if the workers are compelled to return to work, they may deliberately slow down, further crippling the flow of goods through the ports.
The potential strike comes at a time when the global supply chain is already fragile, and its impact could be devastating for industries relying on timely imports. As companies and logistics firms scramble to prepare, the ripple effects of the strike could be felt well beyond the ports, affecting everything from manufacturing to retail.
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