Threats of an ILA walkout are causing the shipping industry to be concerned with the potential impact of a strike. The International Longshoreman’s Association (ILA) will stop working on October 1st when their six-year contract ends. Along with higher wages, other issues include benefits and automation. Talks with the United States Maritime Alliance (USMX) regarding a new contract addressing these concerns have remained unsuccessful. Despite the ILA’s demands, USMX remains unchanged on their current offer. The ILA’s president, Harold Daggett, recently said in an ILA-released video, “Mark my words, well shut them down.” A strike will impact many supply chains that rely on shipping freight internationally.
What Is The Potential Impact Of A Strike?
Due to the ILA’s size, a potential strike can significantly impact the shipping industry differently. The ILA is a union of 45,000 workers in three dozen ports across the East and West Coast. These ports are responsible for approximately 43% of all imports that come into the U.S. The main effect of a strike will be a halt of cargo movement through the ports. As imports and exports stop moving, containers will begin piling, leading to port congestion. Due to congestion, supply chains transporting cargo internationally could experience massive delays in loading and unloading times. A week-long strike may take over five weeks to clear and may even last until 2025.
The disruption from the strike may also impact shipping costs for importers and exporters. When port closures happen, shipping companies raise freight rates due to limited capacity. As vessels pile up in the ports for unloading, it leads to demurrage and detention fees that goes the shipper. To mitigate the delay, more shippers are rerouting their shipments to West Coast ports. Rerouting may become an issue for West Coast ports since it can cause congestion, leading to delays. Similarly, importers could switch to other conveyance methods like land and air. However, this may lead to other expenditures.
Different Sectors Are Urging the ILA And USMX To Come To An Agreement
Different sectors, like the retail and manufacturing industries, have been mainly concerned with the effect of a strike. These industries are pushing the parties to agree to alleviate a potential multibillion-dollar disruption. With the holiday season quickly approaching, companies have already started taking action. The National Retail Federation (NRF) vice president notes, “Many have taken steps to mitigate the potential impact by bringing in products earlier and frontloading the peak shipping season or by shifting products back to the West Coast.” A fear is that retailers will not be able to stock shelves on time for the holidays. Manufacturers’ assembly lines may also shut down if they do not receive the necessary materials on time.
Other industries, like construction, automotive, and farming, will also feel the impact of a strike. Ports with ILA dockworkers like Houston and Savannah import tons of materials for these industries yearly. On a large scale, the economy will feel the effect, and supply chains globally will also feel the effect. While a potential strike can seem daunting if you are a shipper, it should not stop your cargo’s transport. Reach A1 Worldwide Logistics at info@a1wwl.com or 305-425-9513 for any concerns regarding your shipment. Along with educating you on what to expect, we provide transparency and real-time updates on your cargo’s status.
