Customs Brokers, Trade Compliance Firms Brace for Potential Strike at East and Gulf Coast Ports

An October strike by members of the International Longshoremen Association at East Coast and Gulf Coast ports could result in “devastating impacts” on the supply chain for weeks, consultants and logistics professionals told International Trade Today.

“Folks are absolutely focused on this issue and the potentially devastating impacts a strike or even disruption might have on their supply chains,” a president of a Northeast trade compliance and supply chain consultancy firm said in an email.

The ILA and the U.S. Maritime Alliance (USMX) are at a negotiation impasse over a new labor agreement to replace the current one that is expiring on Sept. 30. Earlier this month, the ILA indicated that its members unanimously approved plans to go on strike just after midnight on Oct. 1 if an agreement can’t be reached. USMX meanwhile has said it is open to continuing negotiations with the ILA.

While there’s still time for both parties to reach a labor agreement, those within the supply chain are bracing for ILA union members to go on strike come Oct. 1.

“There is a big concern about a possible port strike. All of the shippers have been advised to ship early if possible to prevent shipments from being held up,” a trade compliance consultant said.

“The scope, duration and intensity of this work stoppage is not known,” so it’s hard to gauge what the magnitude of the strike might be other than to expect it to be disruptive, said Nathan Strang, Flexport director of ocean freight, during a Sept. 12 North American market update.

According to Strang, the East Coast and Gulf Coast ports have processed 8.2 million twenty-foot equivalent units year-to-date. Besides container ships, bulk vessels and tankers also frequent the East and Gulf ports.

While low-value shipments are typically sent either via truck into the U.S. from fulfillment centers in Canada or Mexico or via air as direct-to-consumer shipments, commodities such motor vehicle parts, food imports and construction materials are those that have been traditionally shipped to the East and Gulf Coast ports.

Year-to-date, the commodities with the greatest tonnage coming through East Coast and Gulf Coast ports include furniture and parts (nearly 2.5 million tons), bananas (2.2 million tons), motor vehicle parts (1.8 million tons), semiconductor devices (1.4 million tons) and unglazed ceramic flags and paving (nearly 1.4 million tons), per data from Jason Miller, a supply chain professor and economist at the Eli Broad College of Business at Michigan State University. He collected and organized the data from the Census Bureau’s U.S. Trade Online.

With Oct. 1 just over two weeks away, options are growing limited for alternative routes, although Strang noted that there might be some vessel capacity on the West Coast as carriers consider reinstating sailings.

Shippers also may consider air cargo or shipping products to Canada, although importers should anticipate congestion at the Canadian ports, which vary in their capacity to handle extra volumes.

“In terms of alternatives -- other than moving their supply chains to the West Coast, there are none. Many SME importers and exporters cannot afford to pivot their supply chains like the larger importers can,” the trade compliance consultancy president said. “And with congestion growing at West Coast ports, dwell times increasing, folks are in a very tough spot right now at a critical point in the year for importers that rely on robust holiday sales to support their businesses.”

Importers and exporters may also consider delaying shipments until October or November in order to wait for the market to settle, according to Rachel Shames, vice president of pricing and procurement at CV International, a Norfolk, Virginia-based provider of logistics and trade compliance services.

“A disruption of any length will cause congestion and delays. Prolonged labor stoppages will create massive supply chain delays throughout the country and overseas if vessels begin to line up outside ports,” Shames said in a Sept. 6 update. “Alternatives are West Coast ocean routings and air freight for the most urgent shipments, though those options may become inundated with volume as well.”

Expect ocean rates from Europe to North America to continue increasing as well in response to strike threats, Shames said.

“For exporters, pre-booked ocean capacity could be left sitting at East and Gulf Coast ports until the strike is completed and ships can dock. The longer the strike, the longer it will take the ports to clear the backlog containers and resume outbound shipments. Similar congestion can be expected at alternative ports too if importers pivot to Canadian and U.S. West Coast ports to keep goods moving,” C.H. Robinson’s Mia Ginter, director of North American Ocean, said in an emailed update last month.

Meanwhile, the length of the strike impacts may vary, depending on how long a strike occurs, data analysis firm Sea Intelligence said last month.

A one-day strike could result in a period of roughly four to six days to clear the backlog if one calculates that the East Coast ports have about 13% excess capacity to handle volumes on top of what they already handle, Sea Intelligence said last month.

But if the strike lasts a week, the backlog might not get cleared until mid-November, Sea Intelligence continued. And if a two-week strike occurs, then the ports might not get fully back to normal operations until 2025, the data analysis firm said.