Shippers brace for impact of US East coast strike

As the threat of a strike at US East and Gulf Coast ports escalates, labour negotiations between the International Longshoremen’s Association (ILA) and port operators remain unresolved. With tensions high, efforts to break the deadlock have stalled, and concerns continue to grow as the 1st of October strike date approaches.

Despite requests from 177 trade associations, the White House has declined to intervene. Employers have urged the ILA to resume negotiations, but disagreements over wage proposals, working conditions, and automation remain significant hurdles. The union has firmly rejected the latest wage offer, demanding stronger prohibitions on semi- and fully automated systems within marine terminals, citing concerns over job security and worker welfare.

In anticipation of the strike, shipping rates on the North Europe to US East Coast trade route have surged by 16% week-on-week. This stands in stark contrast to the declining rates on other major east-west trade routes. The rate spike is partly due to carriers implementing peak season surcharges, with shippers rushing to move goods before potential port closures.

Under US Federal Maritime Regulations, ocean freight rate increases or surcharges must be communicated at least 30 days in advance. The first ‘Emergency Operations Surcharge’ (EOS) announcements were issued on 1st September, covering shipments from Europe to the US East and Gulf coasts, as well as ports in the Caribbean, Mexico, and Canada. These surcharges range from USD 800 to 2,400 for 20-foot containers and USD 1,600 to 3,000 for 40-foot containers, with implementation dates stretching from 1st to 19th October.

While there is hope that any strike could be brief, with some predicting government intervention after around a week, the knock-on effects could extend into 2025. Delays to transatlantic supply chains and disruptions in global freight flow seem unavoidable if the strike goes ahead as anticipated.

We will be implementing contingency plans to mitigate the effects of the strike, which could include alternative routes via Canada and the use of air freight, which can offer cost-effective solutions in certain cases. 

Additionally, efforts are being made to clear shipments arriving before the strike deadline and return empty containers to ports by the end of September to avoid further fees.

To discuss the issues raised here and how PSP Worldwide could protect your supply chain, please EMAIL our managing director, Colin Redman.