Negotiations between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) have reached a standstill, with a strike looming as the October 1 deadline for a new collective bargaining agreement approaches. The ILA has halted discussions after discovering the use of an automated gate system at several ports, refusing to return to the table until the issue is resolved. This stalemate leaves the industry in suspense, as the possibility of the union’s first large-scale strike since 1977 looms.
A Perfect Storm for Global Trade
The potential strike’s impact is expected to be amplified by ongoing disruptions in the Red Sea and Panama Canal, creating a “perfect storm” for global trade, according to Mike DeAngelis, the senior director of international solutions for freight visibility platform FourKites. With the Red Sea’s access to the Suez Canal hindered by disruptions and the Panama Canal operating below normal capacity, a strike could effectively block major global trade routes.
Preemptive Measures and Potential Consequences
In anticipation of a potential shutdown, shippers have been pulling scheduled shipments forward and diverting vessels to West Coast ports. However, these measures may only provide temporary relief given the significant volume of cargo that passes through East and Gulf Coast ports. These ports handle approximately 56% of the country’s containerized imports and 68% of exports, spanning a broad range of industries.
The Domino Effect of a Prolonged Shutdown
A prolonged shutdown could lead to inventory shortages, increased grocery costs, and extensive backlogs at shipping hubs. Sea-Intelligence, a supply chain data service, estimates that a one-day strike could result in a five-day backlog at East and Gulf Coast ports. A week-long strike could push this backlog into mid-November, while a two-week strike could extend it into early 2025.
Negotiations at a Standstill
Despite the increasing likelihood of a strike, the USMX has yet to schedule a meeting with the ILA to resume negotiations. The ILA, on the other hand, remains steadfast in its stance, with executive vice president Dennis Daggett stating that strikes remain one of the most powerful tools in their fight for justice. As the deadline approaches, several ports have begun preparing for a possible shutdown, with plans to extend gate hours and evaluate the need for additional resources.
