Potential U.S. East & Gulf Coast Dockworker Strike Looms Large

With less than two weeks left to reach an agreement, the possibility of 45,000 American dockworkers going on strike at the start of next month appears increasingly likely.

Contract discussions between the International Longshoremen’s Association (ILA) and port operators on the U.S. East and Gulf Coasts have come to a halt. The current contract, covering workers at six of the 10 busiest U.S. ports, is set to expire on September 30.

In a video shared on the union’s website earlier this month, Harold Daggett, president of the ILA, issued a stern warning: “The ILA most definitely will hit the streets on October 1st.” The union is pushing for a wage increase exceeding 70%, as well as guarantees from terminal operators to prevent automation at their facilities.

Dennis Daggett, Harold’s son and the ILA’s vice president, emphasized in a recent podcast, “In regards to automation or semi-automation, we’re completely against any type of robotic taking over an actual human being’s job.”

The United States Maritime Alliance (USMX), representing the port operators, indicated last week that no significant progress had been made toward an agreement between the two parties.

In their weekly report, analysts at Linerlytica cautioned, “A coastwise strike at US East and Gulf Coast ports now looks certain to start on 1 October 2024.”

The ILA's 14 controlled ports handled 28.4 million TEU (twenty-foot equivalent units) of container cargo in 2023, processing nearly 550,000 TEU each week. Linerlytica estimates that each week the strike lasts would delay 1.7% of the global containership fleet. Should the strike continue indefinitely, over 4.5 million TEU of the fleet could be impacted, affecting 15% of worldwide containership capacity.

A report from HSBC highlights the potential fallout of a strike, noting that imports from Europe and Latin America could be disrupted, and Asian imports redirected to the West Coast might cause congestion there. The report also raises concerns about renewed issues with container fleet availability and equipment shortages.

“A U.S. port strike would likely reset the clock on containership capacity and box shortage and could spike freight rates,” HSBC warned.

In response, shippers are shifting their cargo from the East Coast to the West Coast to avoid the potential ILA strike, leading to decreased demand on the East Coast. Drewry, a shipping consultancy, reported last week that the Port of Long Beach saw cargo volumes surge by 34% in August as a result of these diversions.

Maersk, a Danish shipping company, recently warned its clients that even a one-week work stoppage could take four to six weeks to recover from, with mounting backlogs and delays making the situation worse as time goes on.

According to Sea-Intelligence, a Danish container shipping analyst firm, each day of a strike could require four to five days to return to normal operations. A one-week strike starting October 1 could lead to congestion issues lasting until mid-November, while a two-week strike could disrupt port operations into 2025.

This week, Ensign Freight, based in Hong Kong, advised shippers about the potential risks of demurrage and detention fees in the event of a strike, warning of significant operational disruptions.

“Once the strike starts, East Coast terminals will not be able to release import containers or accept returns and exports. This is a historic situation, as there hasn’t been a strike on the East Coast in 40 years,” Ensign cautioned.