Strikes at more than thirty ports in the usa are 'on the verge of erupting,' heralding a potential supply chain crisis.

The International Longshoremen's Association (ILA) of the usa has recently stated that if a new labor agreement is not reached with the United States Maritime Alliance (USMX) before the contract expires on September 30th, its 25,000 members will go on strike. On September 17th, the ILA issued a notice stating they are 'prepared to take final action to win a fair contract and will go on strike on October 1st.'

The CEO of Flexport, one of the usa's largest supply chain logistics operators, warns that the upcoming port strike, 'may close all ports along the East Coast and Gulf of Mexico 36 days before the election, becoming the biggest uncertainty in the presidential election.'

What happened with the strike before the election?

The United States Maritime Alliance (USMX) represents carriers and port operators, while the International Longshoremen's Association (ILA) represents 85,000 workers along the East Coast and Gulf of Mexico. The union is demanding significant wage increases for its members and ensuring that workers are not threatened by automation.

In June this year, the ILA union walked away from the negotiating table, claiming that an automation system introduced at the Port of Mobile in Alabama violated the existing contract, as the system 'automatically handles trucks without ILA labor.'

This contract covers all ports from Maine to Texas, including New York, Savannah, Houston, Miami, and New Orleans, which account for 41% of the usa's port throughput.

Initially, executives and economists believed that Washington would intervene in the 2022 freight rail strike as they did before. However, President Biden stated last week that he would not intervene in the labor action at the port.

In its latest statement on Tuesday, USMX stated:

"Unfortunately, we have reached this point where ILA is unwilling to resume dialogue unless all demands are met. The only way to resolve this deadlock is to resume negotiations, and we are ready to do so at any time."

Once the strike occurs, it will have a 'devastating impact'.

According to the union, the strike will affect ports from Maine to Texas, causing a more severe disruption in the supply chain than during the COVID-19 shutdown. An alliance of 177 trade groups warned last week that 'closing these ports would have a 'devastating impact' on the U.S. economy'.

Every year, $240 billion worth of goods pass through these two ports, supporting over 600,000 local jobs. Oxford Economics in a report stated:

"This is the first strike since 1977 and could involve up to 45,000 workers at ports handling as much as 60% of U.S. maritime traffic, leading to severe disruptions in transportation."

Michael Every of Rabobank also mentioned, "American businesses may miss key sales peaks".

The data shows that the trade volume of usa ports is approximately $2.12 trillion, with 72% facing delays, and a one-day strike will take six days to recover. A one-week strike in October will create bottlenecks and continue until mid-November, not including the transportation disruptions caused by the Houthis in the Red Sea.

The last major shutdown was the 11-day shutdown of the West Coast ports in 2002, causing $1 billion in losses per day and leading to a backlog of six months.

Rabobank speculates that if goods are forced to shift to the ports on the West Coast of the usa, Asia-USA freight rates could soar to $20,000, far exceeding the peak of the last supply chain crisis. Analysis suggests that this means companies with low profit margins may choose not to import at all, leading to empty shelves.

Business groups are concerned that such a serious supply chain disruption will significantly increase the cost of importing materials, exporting products, and warehouse transportation, thereby raising consumer prices. In addition, there are warnings that this strike may reduce Harris's chances of winning on November 5.

Port Authority: Coordinating response to impacts, Biden: Not intervening.

Spokesperson for the Port Authority of New York and New Jersey said last Friday that the Port Authority is coordinating with partners across the entire supply chain to address any impacts that may arise from potential strikes during negotiations between ILA and USMX. He stated:

"We urge both sides to find common ground, keep the goods flowing, and benefit the national economy."

However, the Port Authority does not participate in negotiations between them but leases port space to shipping companies. Rooney, director of the Port Authority of New York and New Jersey, said that terminal operators and ocean carriers are "working hard to bring in as many ships as possible before the strike." Measures include collaborating with truck drivers and railroad transportation companies to get out as much cargo as possible as quickly as possible.

Rooney 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 embargoing exports so that goods will not enter the East Coast and Gulf of Mexico coast ports and then be stranded there."

During the strike, container ships carrying imported goods to the ports of Newark and Elizabeth in New Jersey and Staten Island in New York City will dock at designated locations in New York Harbor or along the coast, or remain at sea until they can enter the harbor. After the strike, the Coast Guard and U.S. Customs and Border Protection will oversee the vessels arriving at port facilities.

President Biden stated last week that he will not stop the port labor action. Although the Taft-Hartley Act grants the president the authority to impose an 80-day cooling-off period to delay a strike, he stated that he does not intend to do so, considering the potential impact on union voting.

Editor/Emily