US East Coast Strike – Global Trade Magazine

As the Oct. 1 deadline for port construction on the U.S. East Coast approaches, industries across the country are facing major disruptions. A labor standoff between the International Longshoremen’s Association (ILA) and the United States Maritime Union (USMX) could halt operations and cause damage to supply chains and the economy. With major East Coast ports such as New York, New Jersey and Baltimore taking center stage, ripple effects could devastate supply chains, consumer markets and broader economic sectors.

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

What’s the danger?

if strike Expected supply chain disruptions starting October 1 could cost the U.S. economy more than $1 billion a day.

Essential goods including imported retail items, auto parts and perishable items may be held up at ports or Diversion At considerable expense. Oxford Economics warns that in the long term Strike could affect up to 100,000 jobsadding to pressure on businesses already grappling with inflation and the fallout from previous supply chain crises.

East Coast ports are important gateways for a range of industries. Retailers are scrambling to secure holiday inventory as the strike coincides with preparations for the busy shopping season. The company started importing very early, Move goods to the west coastor even opt for expensive air freight to avoid potential delays.

Commenting on the wider impact of the strike on container trade, Christian Roeloffs, Co-Founder and CEO, Container xChange” said, “The strike could throw container trade into chaos, creating a chain reaction that could seriously disrupt the supply chain. Congestion and delays at these major ports will severely impact container availability, increase costs and disrupt schedules. Small traders, in particular, are likely to feel the pinch as they are more vulnerable to price spikes and long delays in securing and moving boxes. Businesses are taking action now to reroute freight and secure their container supply, otherwise they At risk of getting stuck in congestion with costly consequences“.

The impact of the strike will hit the following industries retail, carand manufacturing The hardest. For example, retailers are already scrambling to import goods ahead of the holiday season. Without contingency plans, many companies will face severe shortages, missed deadlines and soaring logistics costs. Roeloffs further highlighted the risks faced by small traders:

“For small traders, the consequences can be devastating – soaring costs, shortages of containers and delays that can cripple business operations. “ Roelofs added.

Imminent supply chain challenges

1. Detained goods: With 42 container ships expected to arrive at the Port of New York and New Jersey in the next few days, any stoppage could cause cargo to be stranded en route. Shipping lines such as Ocean Network Express (ONE) have advised customers to pick up containers before September 30 and avoid leaving perishable or hazardous materials at terminals.

2. Rerouting Challenges: Rerouting cargo to West Coast ports or alternate East Coast ports can create logistical bottlenecks, especially for cargo that needs to pass through the Panama Canal.

3. Rising costs: Maersk A disruption surcharge has been announced for all cargo entering and exiting U.S. Eastern and Gulf Coast terminals effective October 21. The surcharge is $1,500 per 20-foot equivalent unit (TEU) and $3,000 per 40-foot equivalent unit (FEU), depending on the extent of the supply chain disruption.

lloyd table A “work interruption destination surcharge” is scheduled to be levied on imports from East Asia on October 19 and on goods from the rest of the world on October 18, both at $1,000 per TEU. CMA CGM will impose an export surcharge of US$800 per TEU and US$1,000 per FEU from October 11, and an import surcharge of US$1,500 per TEU. In addition, starting from November 1, they will impose a peak season surcharge of US$1,000 on imported products from the Indian subcontinent and the Middle East, postponed from the original October 1 date.

Ocean Network Express (No. 1) It has not yet finalized its surcharge strategy but has warned customers of possible booking changes starting this week, including ship delays or cancellations.

These additional costs could be passed on to consumers, affecting a variety of goods from vacation products to industrial supplies.

Even if the strike is short-lived, backlogs of cargo will cause delays as ports struggle to clear stranded containers.

Industry specific impacts

Retail businesses, particularly those reliant on imports from Europe and Asia, will bear the brunt of delays. Important holiday merchandise, including apparel, electronics and seasonal merchandise, may not arrive on time.

“The auto industry, which relies heavily on timely shipment of parts, may experience production delays, especially for vehicles assembled in the United States with parts arriving through East Coast ports. “For businesses already struggling with margins and time constraints, Each day of the strike could mean five days of delays. This could be the turning point for many people,” Roeloffs said, emphasizing the logistical pressures.

“Transportation costs are going to skyrocket, and ultimately it’s consumers who will bear the brunt – whether they’re buying holiday gifts or important auto parts,” Roloffs noted.

Strategic advice for supply chain players

To mitigate the impact of potential strikes, supply chain managers must adopt proactive strategies:

1. Change shipment route: If possible, move cargo to other ports on the West Coast or Gulf Coast. While this may require additional Panama Canal transit time or air freight options, all available alternatives must be explored to avoid delays at East Coast ports.

2. Prioritize high-value and critical cargo: It’s critical for industries like automotive and retail to prioritize high-value, high-demand products that can’t afford delays. Despite the higher costs, companies like Designer Brands have switched some shipments to air freight. Roloffs recommends:

3. Speed ​​up customs clearance: Businesses should work closely with freight forwarders and customs brokers to expedite the processing of goods already in transit. Shipping lines such as Maersk and ONE are encouraging customers to expedite imports to avoid potential disruptions.

4. Take advantage of extra boarding time: Ports including New York and New Jersey extended gate hours ahead of strike deadlines. Using this extra time to clear incoming goods will help companies avoid the backlog that occurs when a strike occurs. Terminal operators APM Terminals, Maher and Port Newark Container Terminal will extend gate hours.

5. Diversification of suppliers and logistics providers: To build resilience against disruptions, companies should consider diversifying their supplier base and logistics networks. Reliance on a single port or carrier leaves companies vulnerable to localized disruptions such as strikes.

The bigger picture: long-term consequences

While immediate action could help mitigate short-term disruption, the long-term impact of the strike could last into 2025. Cost pressures across the region will increase on planks as major global carriers prepare to impose surcharges on shipments to and from the U.S. East Coast.

“It’s not just about getting containers out of the port, it’s about keeping trade moving in increasingly fragile supply chains,” Roulofs said, highlighting the wider impact of the strike.