Strikes at U.S. East Coast ports to disrupt major supply chain

The knock-on effects of industrial action at U.S. eastern and Gulf Coast ports will cause significant supply chain disruptions in 2025, with analysts warning that government intervention may be needed to avoid significant economic fallout.

Also read: CH Robinson: How shippers can prepare for potential ILA strikes amid growing disruption in North American shipping landscape

A total of 36 ports are preparing for a complete shutdown if a new deal cannot be reached by the September 30 deadline with the International Longshoremen’s Association (ILA), which represents 85,000 port workers.

“Currently, there are ships at sea carrying billions of dollars of cargo heading to ports along the U.S. Eastern and Gulf Coasts,” said Peter Sand, principal analyst at Xeneta. “These ships can’t turn around or really reroute to the U.S. West Coast. . Some may be moved to ports in Canada or even on the east coast of Mexico, but the vast majority will just wait outside the affected ports until workers return.

“The consequences will be severe, not only congestion at U.S. ports, but more importantly these ships will be delayed in returning to the Far East for their next voyage. A strike that lasts only one week will affect the timing of ships leaving the Far East for the United States in late December and throughout January surface.”

Marine supply chains are already severely disrupted in 2024 due to conflicts in the Red Sea, drought in the Panama Canal and the collapse of the Baltimore Bridge.

Data from sea and air freight intelligence platform Xeneta show that average spot freight rates for trade from the Far East to the U.S. East Coast surged by more than 300% from December 1, 2023, to early July this year.

“More than 40% of total containerized cargo enters the United States through East Coast and Gulf Coast ports, so the risk couldn’t be greater,” Sander said.

“Blocking trade from entering the United States on such a large scale, even for a short period of time, would cause serious damage to the economy and would require government intervention to resolve the problem for the benefit of the country.

Last week, 177 trade associations called for an immediate resumption of negotiations, recognizing the extremely serious consequences of strike action on the U.S. economy.

“Government intervention should be seen as a strength of the system because it will prevent disputes between smaller interest groups, whether dockworkers or port terminal owners, from having a significant impact on the wealth of the entire country.

“If the parties cannot resolve the dispute on their own, someone will need to do it for them, as a prolonged shutdown of trade along the U.S. Eastern and Gulf Coasts will have deleterious effects on supply chains and the economy.”