Shippers have about a week to prepare contingency plans for if workers strike at East Coast and Gulf Coast ports in the U.S.
The International Longshoremen’s Association is approaching the expiration of its master contract with the United States Maritime Alliance, or USMX, on Sept. 30, which covers 45,000 workers across ports from Maine to Houston.
The union’s chances of averting an Oct. 1 strike are dwindling as automation concerns and wage disagreements stall negotiations. The Biden administration made it clear it would not intervene to prevent a potential strike, though the port employer’s group said it has been in contact with federal agencies on the status of negotiations.
A strike would have a major impact on operations and the flow of goods at several ports. The contract between the ILA and USMX covers ports in states such as Texas, Maine, New York, New Jersey and Florida, but a strike could spur disruptions for other regions and industries.
“Shippers with freight across Europe, Oceania, and Asia bound for the U.S. will especially feel the impact, which would cascade to disrupt the flow of freight across the U.S., Canada and Mexico,” C.H. Robinson Director of North American Ocean Mia Ginter said in a blog post in August.
In agriculture, a strike has the potential to snarl exports of grains and meats. Gulf ports make up a significant chunk of beef and pork exports serving markets including Europe, Africa and Latin America. Meanwhile, the New Orleans Port region was the world’s top grain and oilseeds export hub in 2023, and a shutdown would add to low Mississippi River water levels and other transportation hurdles already faced by growers.
How can shippers prepare for a strike?
There are several options for shippers to minimize disruptions, such as exploring alternative shipping routes.
Importers and exporters can establish a multi-coastal transportation network in advance of a potential labor disruption, Kuehne and Nagel EVP of Sea Logistics Michael Aldwell said in an email.
“This can take the form of a transload capability or operation or an alternate coast gateway at smaller volumes that can be scaled in the event of a disruption,” Aldwell said.
Another option, familiar to shippers after years of port disruptions, is to divert cargo. Cargo can be shifted to ports along the U.S. West Coast, Canada or Mexico, Josh Jungwirth, EVP of Freight Forwarding for the Americas Region at Geodis, said.
Other ports shippers can use to divert cargo from the East and Gulf Coast
| Region | Ports | Service |
|---|---|---|
| U.S. West Coast | Los Angeles, Long Beach or Oakland | Transload and full truckload or rail and drayage |
| Canada | Vancouver, Prince Rupert or Halifax | Transload and full truckload or rail and drayage |
| Mexico | Lazaro Cardenas | Inbound rail option via CPKC to Houston and Kansas City |
SOURCE: Josh Jungwirth, Geodis EVP of Freight Forwarding in the Americas region
The choice on what alternative ports to use depends on factors like cargo origin and destination, shipping lanes and available capacity, Jungwirth said.
However, diverting cargo can come with costly delays and can be more difficult for shipments of goods like meat or other temperature controlled products. Additionally, there could be capacity constraints at West Coast ports as shippers across industries are expected to make adjustments.
“Redirecting to the West Coast is a potential, very short-term solution, but it’s by no means a long-term solution at all,” Dan Halstrom, president of the U.S. Meat Export Federation, told Farm Journal’s Pork Business. “You’ve got all sorts of commodities that use these same ports.”
Is it too late to take action?
Experts were mixed about whether it’s too late to enact strike contingency plans, but most agreed the longer companies wait, the more expensive adjustments can become.
“The key challenge is, if you want to make contingency plans or re-routings until a disruption occurs, it will be very difficult and expensive to find the capacity and partners needed,” Aldwell said.
It could also be too late depending on the origin of cargo, according to Freightos Head of Research Judah Levine. In a Sept. 10 update, Levine said it’s “about past the deadline” to move containers from Asia to the East Coast before a strike, while Transatlantic shippers still have a little time left to move containers. This is because it takes much longer to ship from Asia than from Europe to the U.S. East Coast.
Even moving cargo to alternate ports may not be enough for shippers to avoid major challenges if a strike occurs.
“While many shippers have already started to use these solutions, they are only ad-hoc solutions, because if there is a true slow down or stoppage, neither of these options are sufficient to handle the needed volumes,” CEVA Logistics’ Bowen said.
Lastly, even shippers re-routing cargo to the West Coast brings forward the issue of inland capacity. Without prior planning, East and Gulf Coast cargo diverted is far less likely to be prioritized for domestic intermodal truck or rail services, Ginter said.
“In addition to capacity and delay concerns, warehousing space may be necessary to store rerouted freight until inland capacity is available,” she added.
Trade groups including the American Soybean Association and the USMEF are pushing the Biden administration to intervene as it did to prevent recent work stoppage threats at West Coast ports and Class I railroads.
“A strike at this point in time would have a devastating impact on the economy, especially as inflation is on the downward trend,” according to the letter signed by 177 trade groups.