Article by: Rick Walker, Vice President, TradeInsights, LCB/CCS

The International Longshoremen’s Association (ILA) represents over 45,000 port workers over 36 ports along the East and Gulf coasts and their current 6-year contract expires on September 30. Talks with the United States Maritime Alliance (USMX) which represents port management broke down over the summer and not much progress has been made since then. The ILA rank and file recently voted unanimously to authorize a strike and the USMX recently stated that it believes the union has already made the decision to strike. Close to half (43%-49%) of all monthly U.S. imports would be impacted, representing billions of dollars in trade, and logistics firms are preparing contingency plans last used during Covid. Currently, there is an estimated $34 billion in freight en route to these ports on 147 ocean vessels. Port of New York/New Jersey executives have stated that they are preparing for a complete work stoppage.

Harold Daggett, the ILA’s president, warned earlier this month in a video uploaded to the union’s website: “The ILA most definitely will hit the streets on October 1st”. The union has been seeking wage increases of more than 70%, plus commitments from terminal operators to avoid automating operations at their facilities. The Biden administration has said it will not invoke powers under the Taft-Hartley Act to force union members to go back to work and urged the parties to return to the bargaining table. “We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now,” a Biden administration spokesperson said on Sept. 4. Adding to that, Harold Daggett recently warned at a union meeting that if members were forced to go back to work, they would deliberately slow down. That would only add to the pileup of containers crippling supply chain fluidity.

Ocean carriers have been issuing contingency plans over the last week as have the ports. In an advisory to clients, the Georgia Ports Authority recommended import delivery “well before October 1 to minimize any disruptions,” and added it will offer weekend gates to support this effort. On exports, the port explained both refrigerated and nonrefrigerated containers will be received up to Sept. 30. Similarly, The Port of Houston, for example, has published its strike prep guidance for customers. The Houston port has indicated that it may extend gate hours during the week of Sept. 23, if necessary. It is also planning to open the gates on Saturday, Sept. 28, subject to confirmation early next week.

It would be difficult to overstate the negative impact that a strike with this magnitude would have by effectively shutting down U.S. East Coast and Gulf Coast ports. The length of the disruption would create ripple effects throughout the entire U.S. economy, leaving many businesses to sort through options to manage risk.

Importers and exporters with exposure to these port disruptions should pay close attention to any ongoing negotiations and prepare to implement contingency plans should those negotiations fail.

We will continue to monitor the situation and provide updates as needed. The major news networks are all giving coverage to these events as well.

Please contact your V. Alexander account team, or you may also contact our Trade Compliance team at tradeinsights@valexander.com with any questions.