US east coast port strikes threaten automotive supply chain: Live blog

19 September

The International Longshoremen’s Association (ILA), which represents more than 85,000 dockworkers, is demanding a new contract with the representative of the dock employers, United States Maritime Alliance (USMX), asking for wages that are proportionate with the billion-dollar profits earned by ocean carriers. The USMX employers include Maersk’s APM Terminals and SSA Marine.

Talks between the union and the USMX broke down in June, and on 13 September the USMX claimed there had been no further negotiations on the master contract. If an agreement between the union and the USMX is not met by the time the current six-year contract expires on 30 September, strikes will begin immediately, according to the ILA.

Any hopes of government involvement have been dashed, as administration officials said this week that US President Joe Biden doesn’t intend to invoke a federal law known as the Taft-Hartley that could force workers back on the job during an 80-day cooling off period.

In a statement, the ILA said: “Time is running out to get a new master contract agreement settled with USMX.” Meanwhile, the USMX said: “The only way to resolve this impasse is to resume negotiations, which we are willing to do at any time.”

What ports will be affected by the ILA strike?

Ports with ILA operations span across North America’s east coast, including in Boston, New York, Philadelphia, Baltimore, Hampton Roads, Wilmington, Charleston, Savannah, Jacksonville, Miami, Tampa, Mobile, New Orleans and Houston. The port authorities of New Jersey, Houston and New Orleans also fall within the ILA.

Last year, the US east coast and Gulf coast ports accounted for more than half (57%) of US imports and 8% of global container trade, according to HSBC Global Research’s latest Global Freight Monitor.

Most of the ports with ILA workers are container ports, meaning the majority of affected automotive operations would likely be in inbound and parts logistics, although the effects will likely ripple to disrupt finished vehicle logistics too.

In fact, in 2023, containerised car deliveries soared on the east coast, with the Port Authority of New York and New Jersey reporting it handled more than 35,000 containerised vehicles last year, amounting to ten times the amount it handled in 2022. BMW and Toyota have terminals at the port and terminal operator FAPS also has a facility for processing vehicles for Ford, GM, Nissan, Polaris, Polestar and Nissan, among others.

Baltimore and its surrounding ports have already been under pressure this year after the Francis Scott Key Bridge collapse in Baltimore in March, which disrupted vehicle handling for months. Baltimore is the busiest US vehicle-handling port in the US, with its vehicle terminals, including Dundalk and Fairfield, having moved 847,158 vehicles in 2023. The bridge collapse put additional strain on nearby ports including New York, Norfolk and Philadelphia as vessels were forced to reroute to them during the incident.

Impact of east coast strikes on capacity and rates

September is traditionally one of the busiest months for US containerised imports, and last month saw container cargo imports surge by13% year-over-year, with major ports handling nearly 2.5m TEUs.

Christian Roeloffs, co-founder and CEO of shipping marketplace Container xChange said in a customer advisory notice issued this week that the strong freight demand intensifies concerns about the strikes. 

“The possibility of strikes in US east coast and Gulf ports adds uncertainty for container shipping professionals doing business in the US,” Roeloffs said. He added that “short-term spikes” in demand should be anticipated as companies rush to secure capacity for leased containers in the run-up to the potential strike action.

However, he added that US inventories are strong due to the pulling forward of orders earlier in the year to avoid existing disruptions. “This stockpile will act as an essential buffer, mitigating the risk of container rates spiking dramatically due to the strikes.”

Of course, the overall impact of the strikes will depend on how prolonged the action is. Maersk has already warned of severe disruptions, noting that even a brief strike could cause accumulated backlogs that would take weeks to shift.

More to follow…