FX168 Financial News (Asia Pacific) reported that the well-known financial blog ZeroHedge stated that the major US supply chain logistics operator Flexport warned that the looming port strikes before the November US presidential election had raised concerns, with potential strikes threatening ports along the East Coast and the Gulf of Mexico. A spokesperson for the Port Authority of New York and New Jersey stated that this could lead to a paralysis of the $240 billion supply chain annually.

(Source: Twitter)

Last Friday (September 20), a spokesperson for the Port Authority of New York and New Jersey told CBS News that they are "coordinating with partners across the supply chain to address any potential impacts" as workers represented by the International Longshoremen's Association may strike during negotiations with the United States Maritime Alliance (USMX).

The spokesperson added, "We urge both sides to find common ground, keep goods flowing, and promote the US national economy."

He pointed out that $240 billion worth of goods are transported through these two ports annually, providing over 600,000 local jobs.

According to the union, the strike would affect ports from Maine to Texas and cripple the supply chain more severely than during the COVID-19 shutdown. The Oxford Economics Research Institute stated in a report that this would be the first stoppage since 1977, potentially involving up to 45,000 workers at ports accounting for about 60% of US shipping, resulting in severe disruptions in freight.

Grace Zwemmer, Deputy US Economist at Oxford University, stated in the report, "Even a two-week strike could disrupt the supply chain until 2025."

Michael Every of Rabobank mentioned that American companies may miss the crucial Black Friday/Cyber Monday sales peak. The port trade volume is around 2.12 trillion US dollars, with 72% facing a standstill. It is reported that a one-day strike will take six days to recover, and a week-long strike in October will lead to bottlenecks lasting until mid-November, excluding the turmoil caused by non-terrorist Houthi armed group in the Red Sea.

If goods are forced to be redirected to ports on the US West Coast, Rabobank speculates that the shipping cost from Asia to the USA could soar to $20,000, significantly higher than the peak during the last supply chain crisis. This means that companies with low profit margins may choose not to import at all, resulting in empty shelves.

(Source: ZeroHedge)

The International Labour Organization threatens that if by October 1st the current contracts expire without reaching a new labor agreement between US East Coast port terminals and shipping companies represented by USMX, the International Labour Organization will hold a strike. Although negotiations are ongoing, the likelihood of a rare strike occurring and potentially leading to the closure of some of the busiest ports in the USA is increasing.

Bethann Rooney, Director of the Port Authority of New York and New Jersey, stated during a briefing earlier last week: "If intervention measures are not taken, the port will be closed on September 30." The Port Authority of New York and New Jersey is the second busiest port in the USA.

Rooney further mentioned that in such a scenario, all container and automobile handling activities will cease, but cruises will continue to operate. The port authority does not take part in negotiations between the ILA and USMX, instead leasing port space to shipping companies. Rooney stated that terminal operators and shipping carriers are "working hard to bring in as many ships as possible" in preparation for a potential strike.

He mentioned that these measures include "collaborating with truck drivers and rail transportation providers to move out as much cargo as possible as quickly as possible".

He said, these two ports currently unload about 20 large container ships per week, expecting to unload 0.15 million containers before the strike deadline.

"At the same time, ocean shipping companies have begun to embargo exports to prevent goods from entering the East Coast and Gulf of Mexico ports and ultimately getting stuck there," she said.

During the strike, container ships carrying imported goods to the ports of Newark, Elizabeth, and Staten Island in New Jersey and New York City will anchor at designated points in New York Harbor or nearby at sea, or remain at sea waiting to enter the port. After the strike ends, the Coast Guard and the U.S. Customs and Border Protection will supervise arriving vessels at the port facilities.

In June this year, the ILA union walked away from the negotiating table, claiming that the introduction of a type of automation equipment at the Port of Mobile in Alabama violated the existing contract.

The ILA headquarters is located in North Bergen, New Jersey, representing 85,000 workers along the East Coast and Gulf of Mexico. The union is demanding a significant increase in its members' wages and protection from the impact of automation that could "strangle jobs".

USMX has not been able to schedule new negotiation meetings with the union. USMX stated in the latest news last Tuesday: "It is disappointing that we have reached this point, as ILA is unwilling to resume dialogue unless all demands are met. The only way to break the deadlock is to resume negotiations, and we are willing to do so at any time."

While the Taft-Hartley Act grants the President the power to implement an 80-day cooling-off period to delay a strike, U.S. President Biden has stated he does not intend to use this power here as it may influence union voting; although truck driver unions traditionally support the Democratic Party, the truck driver union refuses to endorse Kamala Harris, which may be a moot issue.

On the other hand, Every warns that the above type of setbacks might weaken Harris's chances of winning on November 5th. #USPresidentialElection#