News / East coast port strike threat prompts shippers to consider heading west instead

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Cargo owners have been advised to make contingency plans for a strike at US east and Gulf coast ports that could hit traffic flows as early as 1 October, right in the peak shipping season.

The six-year labour contact between the International Longshoremen Association (ILA) and United States Maritime Alliance (USMX), covering ports on the eastern US coastline, is set to expire on 30 September.

The ILA represents about 45,000 port workers, while the USMX speaks on behalf of the terminal operators at 46 ports from Maine to Texas.

The two sides started talks a year ago, but those stalled after only a few weeks. ILA president Harold Daggett has repeatedly warned that the union would not continue work under the current contract past its expiry date, signalling a strike as early as 1 October.

He has instructed union branches to resolve local work issues by mid-May, aiming to avoid a repeat of the contract negotiations on the west coast that were held up by a local dispute.

This leaves a relatively short window to settle the main contract talks, which are expected to struggle over labour remuneration, automation and work jurisdiction.

The union has sued USMX and two carriers – Hapag-Lloyd and OOCL – for $300m over a contested hybrid labour model at the Leatherman terminal in Charleston, arguing that this violates the existing master agreement. It is also resisting a move by wind energy developer Orsted to allocate work related to handling offshore wind components at the port of New London to the International Union of Operating Engineers.

According to some observers, the impact of work stoppages on imports would be almost immediate, owing to the ILA’s stance and the situation with the Panama Canal.

Cargo owners are worried. In January, Matthew Shay, president and CEO of the National Retail Federation (NRF) wrote to Mr Daggett and USMX chairman and chief executive David Adam, urging both sides to restart contract negotiations as soon as possible.

Retailers have to make arrangements for their peak season imports. Without a good sense of how the negotiations are progressing, they will be making plans to avoid getting caught up in any disruption in October, said Jonathan Gold, NRF VP for supply chain and customs policy, adding that this could prompt a shift of cargo flows to the US west coast.

Logistics providers are urging their clients to draw up plans for alternative arrangements in case of a strike.

“As we navigate ocean carrier RFP season this month, it is important to strategically plan your supply chain for the next 12 months,” said Paul Brashier, VP of drayage and intermodal for ITS Logistics. “Contingency plans should be put in place during this current ocean contract season.”

Like Mr Gold, he also sees routing cargo through west coast gateways as one likely approach – “a strategy to keep in mind,” he said.

And cargo owners are taking heed. In December, there were reports of companies shifting flows from Atlantic and Gulf Coast gateways to the west.

Amid rising box volumes, executives at west coast gateways have claimed a migration of traffic from eastern ports.

“Our top-notch customer service and efforts to attract business back to the west coast are paying off,” declared Port of Long Beach CEO Mario Cordero when the port released its traffic figures for February.

It handled 674,723 teu, a 24.1% gain over February 2023, while imports climbed 29.4%. For the first two months, throughput at Long Beach was up 20.7%.

The port of Los Angeles reported an 18% rise in throughput to 855,652 teu for January, with imports up 21.1%

It is unclear how much of these gains are due to diversions in response to the issues with the Panama Canal, or concerns about an east coast strike later this year. The latter contingent is likely to rise unless there is a marked shift in the stand-off soon.