Sea freight in Q4 2024 is navigating turbulent waters. Between port congestion, labor disputes, and capacity shortages, the pressure on global supply chains is hitting its peak. Ships are waiting for days at major hubs across the globe. A surge in demand for goods, combined with labor shortages and stricter environmental regulations, has created bottlenecks at key locations.
Here are the main factors contributing to the logjam:
- Post-pandemic demand surge: Consumer demand for goods has skyrocketed, overwhelming port infrastructure globally.
- Labor shortages: Several ports, including major European and Asian hubs, are grappling with labor issues, leading to delays.
- Environmental restrictions: Stricter regulations on emissions and energy use are slowing down operations and throughput.
With ships queued for days at major ports globally, any additional disruption can further destabilize the sea freight system. Now, with the threat of the US East Coast and Gulf Coast port strike by the International Longshoremen’s Association (ILA) union, things could get even more complicated on the US side.
Strikes at all ILA ports (stretching from Maine to Houston) appear to be imminent. Tensions between the ILA and their employers represented by United States Maritime Alliance Ltd. (USMX) have soared during negotiations of their new Master Contract Agreement. Their current contract expires at the end of the month. Fears are increasing that the two parties will likely not reach an agreement by the expiration, opening the door for a strike at East Coast and Gulf Coast ports.
In the ILA’s latest press release and news report, ILA Rank and File Members Ready to Take Ultimate Stand to Win a Fair Contract; They Will Strike on October 1st for Wages and Benefits they Believe they Deserve, ILA President Harold J. Daggett declared “A sleeping giant is ready to roar on Tuesday, October 1, 2024, if a new Master Contract Agreement is not in place. My members have been preparing for over a year for that possibility of a strike.”
A Strike on the Horizon
The ILA, representing dockworkers at major ports along the US East and Gulf Coasts, is threatening a strike over disputes related to wages, job security, and working conditions. If the strike goes ahead, it could shut down critical ports like New York, Savannah, and Houston—ports that handle a large portion of US imports.
As per the recent report by DNT Basis Analyst, Mary Kennedy, titled Cash Market Moves US East Coast and Gulf Coast Port Strike by ILA Union Appears Imminent: “The ILA represents more than 85,000 people. The current six-year contract expires on Sept. 30, 2024, and covers approximately 45,000 port workers employed in container and roll-on/roll-off (cargo ships designed to carry wheeled cargo) operations at ports from Maine to Houston. A strike by ILA is planned for Oct. 1, 2024, if negotiations fail.”
Companies are preparing their customers for the negative impacts from the labor strike. For instance, Vanguard Logistics issued a customer advisory warning that the imminent strike might lead to a rippling effect, including:
- Potential Delays: Should a strike occur, operations at major U.S. East Coast and Gulf Coast ports would be severely affected, leading to congestion and delays.
- Port Diversions: The need to explore alternative port options to minimize disruptions and ensure that your cargo reaches its final destination as efficiently as possible.
- Additional Costs: There could be increased costs related to demurrage, detention, and rerouting depending on how the situation develops.
The Cost of Disruption
The financial impact of the possible labor strike is undeniable. For example, in preparation for the possible strike, companies like ECU Worldwide USA are making plans to protect their operations. As released this week, ECU has announced a $20 w/m LCL Emergency Congestion Surcharge applicable to all LCL shipments departing or discharging in the U.S effective October 1, 2024. This is a precautionary measure issued as a customer advisory notice. Over the next two weeks, the ECU will continue to monitor the possible settlement with hopes that an agreement can be met and labor strike avoided. However, at this time, it appears no significant progress has been made between the two parties.
Navigating Rough Waters
Shippers are scrambling to adapt. Some are rerouting their freight to alternative ports, while others are booking shipments months in advance to secure limited cargo space. It’s a real race against time.
Will the ILA strike? Will congested ports finally see relief? For now, it’s all about staying agile amid this sea freight storm. While some businesses may navigate these disruptions successfully, others could be anchored by delays, rising costs, and logistical chaos.
Head for Calm Water
To speak with a professional about your custom freight needs, you can contact a Profreight representative at +1 (732) 429-1600, email [email protected], or fill out the contact form at https://www.profreight.us/contact/ to receive a free quote.
