There is more bad news for the trade that sends cargo by sea. A major strike has broken on the East coast ports of the US, which could disrupt movement of goods to the US. The trade is already facing trouble due to ships avoiding the Suez Canal due to Houthi attacks and needing to take a longer route via the Cape of Good Hope. The strike will only aggravate the situation and lead to delay in cargo for the Christmas and New Year festive season, said sources.
Nearly 45,000 workers of the International Longshoremen’s Association (ILA) are on strike, impacting 36 ports that handle roughly half of the goods shipped into and out of the US. They are demanding a wage hike and a curb on automation, which will lead to job loss.
The US has retained its position as India’s top trading partner in the January-July 2024 period with bilateral goods trade surpassing $72 billion and Indian exports growing 9.3 per cent to $48.2 billion.
A leading garment exporter said he is in a wait and watch mode before taking a call whether to divert the cargo via West Coast or Canada.
The strike could lead to significant disruptions in the supply chain, potentially causing delays and price increases for a wide range of goods from automotive parts, electronics, to food items like fruits, coffee, and even holiday goods, Chris Richards of CLN Worldwide, a freight forwarding agency based in Charlotte, US, said in a social media message.
Wage issue
The ILA is demanding a substantial wage increase, reported to be around 77 per cent over six years, and stricter controls or bans on automation in port operations. This automation, which includes cranes and container-moving technologies, is at the heart of the dispute, with workers fearing job losses.
Lars Jensen, an expert in the container shipping industry based in Copenhagen, Denmark, said, “today is day 1 of the USEC strike and day 290 of the Red Sea diversions. The strike on USEC has begun and Houthi attacks have resumed.”
The United States Maritime Alliance (USMX), which represents the interests of container carriers, direct employers, and port associations on the East and Gulf Coasts of the US, has put forward a proposal for a 50 per cent wage increase, triple employer contributions to employee retirement plans, a strengthened health care option, and to retain the language around automation and semi-automation which was already in the current contract.
“The last strike in 1977 lasted more than 6 weeks, and hence the question now is how long this one will last. One issue is whether President Biden at some point will invoke Taft-Hartley and stop the strike. The problem is that this could negatively impact the democrats in the presidential campaign,” he said.
Supply chains hit
The labour impasse between the ILA and the USMX threatens to halt operations and cause damage to supply chains and to the economy. With key East Coast ports such as New York, New Jersey, and Baltimore in the crosshairs, the ripple effects could devastate supply chains, consumer markets, and broader economic sectors, said Christian Roeloffs, co-founder and CEO of Container xChange. The strike could cost the US economy over $1 billion per day, he added.
Essential goods, including imported retail items, automotive parts, and perishables could be stranded at ports or rerouted at considerable expense, he said.
With 42 container ships scheduled to arrive at the Port of New York and New Jersey alone in the coming days, any work stoppage could leave cargo stranded in transit. Shipping lines such as Ocean Network Express (ONE) are already advising customers to pick up their containers by September 30 and avoid leaving perishable or hazardous materials at the terminals.
Maersk has already announced a disruption surcharge for all cargo moving to and from US East and Gulf Coast terminals, starting on October 21. The surcharge will be $1,500 per twenty-foot equivalent unit (TEU) and $3,000 per forty-foot equivalent unit (FEU), depending on the extent of the supply chain disruption, he said.