What’s inside?
Are you crying about the upcoming “bananas, booze, chocolate and cherries” shortages?! (Hat tip to CNN).
Longshore workers at East and Gulf ports in the U.S. are set to strike today (no talks were scheduled at the time of publication)…
For the first time in almost five decades, it seems the International Longshoremen’s Association (ILA) union is headed for a strike! The labor contract between the union representing 45,000 port workers and the U.S. Maritime Alliance (USMX) employer group will expire late Monday.
The Strike’s Impact is Already Apparent
One may expect to see a decrease in port calls in these areas, but Windward’s Maritime AI™ platform identified an increase in the number of port calls over the past two weeks.
There are 403 weekly port calls in the East and Central Coast ports by all cargo vessels, on average. There were 444 port calls from September 15-21, and last week (Sep 22-28), there were 424. This shows 10% and 5% increases, respectively.
Last month, there were mostly course deviations by cargo vessels in the East Coast, most noticeable near Savannah, New York, and New Orleans, mostly happening on September 26.
It is likely that since the strike threat became more real, vessels rushed to the possible affected ports, shown by the increase in port calls, so they won’t be stuck after the strike. Then freighters may have started changing their destinations on September 26, as seen by route deviations:
From September 24 -26: 425% increase in vessels making course deviations from U.S. ports
Will the Port Strike Bring Back COVID-19 Shortages?
Industry data indicates that the ports in questions handle more than 68% of all containerized exports in the U.S. and roughly 56% of containerized imports.
Windward’s AI-powered insights from our Ocean Freight Visibility solution paint an even more dramatic picture. More than 73% of all shipments to the U.S. are heading towards the East Coast and Gulf of Mexico ports during October 1-31.
The ripple effects are expected to be massive, costing the U.S. billions each day. According to some estimates, a strike lasting more than seven days could bring back the shortages people experienced during the pandemic!
This would eventually lead to capacity and empty container shortages at origin ports in Europe and Asia, spreading the impact to lanes out of those hubs.
Additionally, a longer-term strike could lead to pauses in factory production, resulting in shortages during the busiest season of the year, which includes Halloween, Thanksgiving, and Christmas.
To understand the magnitude, let’s zoom in on the Port of New York and New Jersey, which was the third busiest port in the U.S. in 2023. In 2022, it moved approximately $271 billion worth of goods, handled 423,059 automobiles, and managed 2,106,709 metric tons of bulk commodities.
This is what one year of exported and imported of goods looked like:
Exports (TEUs)
Vehicles and parts, etc. | 217,947
Wood pulp (waste & scrap) | 205,680
Plastics and articles thereof | 82,151
Wood and articles of wood | 63,176
Appliances, machinery, & parts | 60,005
Aluminum and articles thereof | 36,637
Food industry residues, & waste | 30,182
Oil seeds, grain, seeds, fruit, plants | 28,959
Special classification provisions | 28,108
Paper & paperboard | 25,831
Imports (TEUs)
Commodities | 2022
Furniture | 598,739
Appliances, machinery, & parts | 361,395
Plastics and articles thereof | 360,882
Beverages, spirits and vinegar | 250,765
Electric machinery & parts | 225,828
Apparel and accessories, knit | 178,536
Articles of rubber | 155,915
Vehicles & parts | 154,240
Articles of iron or steel | 144,928
Toys, games & sport equipment | 143,917
What are the Strike Mitigation and Rerouting Options?
In anticipation of the strike, East Coast ports are extending operating hours and setting strict deadlines for container movements. Meanwhile, ocean carriers have suspended new export bookings and introduced substantial surcharges, ranging from $400 to $3,000 per forty-foot equivalent unit (FEU) for East Coast-bound containers in October.
The Federal Maritime Commission (FMC) has issued a stern warning to carriers and operators against imposing excessive detention and demurrage fees during the strike.
What about rerouting? Spoiler alert: there are no great options…
It has already been exceptionally busy on the U.S. West Coast. For those considering rerouting millions of additional containers to the Ports of Los Angeles and Long Beach (the first and third busiest ports, respectively), it’s worth noting how busy they already are.
The Port of Los Angeles handled a near-record 960,597 TEUs in August, marking a 16% increase over the previous year. It was the busiest non-pandemic month ever at the port.
Eight months into 2024, the Port of Los Angeles is 17% ahead of its 2023 pace, already moving nearly one million more containers than last year.
Long Beach handled 913,873 TEUs in August, which is 34% more than August of last year. The port has handled 22.1% more volume than it did in 2023 and the year obviously isn’t over.
Rerouting to Canada could be complicated. Canadian ports on both the East and West Coasts are also dealing with labor disputes. Montreal longshoremen have approved a potential strike as conflicts on the Canadian waterfront intensify, although an official date hasn’t been set.
We’ll continue monitoring the situation.
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