With contract negotiations at a stalemate, the possibility of a U.S. East Coast dockworkers’ strike threatens to paralyze global container shipping, impacting millions of TEUs and leaving terminals idle. |
September 5, 2024Global container shipping markets could face a significant shock, one that they are ill-prepared to handle, if dockworkers at U.S. ports go on strike next month, according to a senior executive at Hapag-Lloyd. Negotiations between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA), which represents over 14,000 dockworkers at U.S. Gulf and East Coast ports, have been ongoing since 2022. The current master contract expires on September 30, 2024, and ILA President Harold Daggett warned on September 4 that the union “will most definitely hit the streets on October 1 if we don’t get the kind of contract we deserve”. Speaking on the latest episode of The Freight Buyers’ Club podcast, produced with the support of Dimerco Express Group, Torsten Hartmann, Senior Director Trade Management Transpacific at Hapag-Lloyd, said a strike closing ILA-manned ports would have far-reaching, global consequences. “If we were to see a full-blown strike on the whole U.S. East Coast, this will be very significant in terms of impact to shipping,” Hartmann stated (see video here available for publication). “I’ve been asked by the management in my company, ‘What’s your Plan B?’ The honest answer is there’s no way you could possibly circumvent a full-blown strike on the U.S. East Coast. The volume that is being moved there, you will not be able to work your way around that.” Recent estimates from container shipping consultancy Sea-Intelligence highlight the potential scale of disruption. In a report last month, the firm estimated that U.S. East Coast ports handle around 2.3 million TEU (twenty-foot equivalent units) in October, averaging 74,000 TEU per day. Sea-Intelligence CEO Alan Murphy warned that even a one-week strike at the start of October could cause a backlog that would not be fully cleared until mid-November. Hartmann echoed these concerns on the podcast, explaining that a common industry rule of thumb is that each day of a strike typically results in a week of disruption to clear the resulting backlog. “In the meantime, ships would be stuck, cargo would pile up, and terminals would be unable to operate,” he added. “A full-blown strike would indeed be a very significant event.” Hapag-Lloyd, the world’s fifth-largest container shipping line by fleet size, is a member of USMX. However, Hartmann noted that he is not involved in the specific details of the ongoing negotiations with the ILA. In the same episode of The Freight Buyers’ Club, Hartmann also outlined Hapag-Lloyd’s ambitions for service reliability on its Transpacific routes as the company prepares to launch its new partnership with Maersk, known as the Gemini Cooperation, next year. The podcast also features Chris Rogers, Head of Supply Chain Research at S&P Global Market Intelligence, who discusses an unexpected decline in demand for sports clothing and equipment, despite a summer packed with high-profile sporting events. The Freight Buyers’ Club is available on all podcast platforms including: • YouTube: https://youtu.be/HOXyqoN9gg4 • Spotify: https://open.spotify.com/episode/0qabyXPAExOpNRLOZN5lus?si=a8c37f82dc6347e0 |