Table of contents
Topic of the week:
The International Longshoremen's Association (ILA) has threatened to go on strike on October 1, 2024, if a new contract is not agreed upon with port ownership. The strike would have significant economic implications for the US, with 43% of all US imports and billions of dollars in trade monthly potentially impacted.
The ILA, which represents longshoremen on the East Coast, Gulf Coast, and Puerto Rico, has been negotiating with the United States Maritime Alliance (USMX) for a new contract. The union has been seeking better wages, benefits, and working conditions, as well as opposition to port automation and exclusive port contracts.
The USMX has stated that it remains committed to negotiating a new contract and avoiding a strike. However, the ILA has indicated that it is prepared to strike if its demands are not met.
A strike by the ILA would have far-reaching consequences for the global supply chain. East Coast ports would be severely impacted, with an estimated 2.3 million TEU (twenty-foot equivalent units) of cargo potentially delayed. This could lead to a backlog of container pickups for trucking and rail, causing delays and increased costs for businesses.
The National Retail Federation, the National Association of Manufacturers, and the US Chamber of Commerce have all expressed concerns about the potential impact of a strike on the economy. The NRF has urged the Biden administration to work with the negotiating parties to reach a new agreement, while the NAM has warned that a strike would upend logistics for US businesses and hinder the movement of goods.
The ILA has been vocal about its opposition to port automation and exclusive port contracts, which it sees as threats to its members' jobs and livelihoods. The union has also been seeking higher wages and benefits, as well as a greater share of the profits generated by the ports.
The strike threat has already caused some shippers to shift imports from the East Coast to the West Coast, which could further exacerbate the impact of a strike. The ILA's compensation model, which is based on the amount of tonnage processed at its ports, makes it in the best interest of the union workers to maintain cargo volumes and avoid diversion.
The Federal Mediation & Conciliation Service (FMCS) has been notified of the contract expiration and has reached out to both parties to offer its services. However, it is unclear whether the FMCS will be able to facilitate a resolution to the dispute.
In conclusion, the ILA strike threat is a significant risk to the global supply chain and the US economy. Businesses and consumers should be prepared for potential disruptions and delays, and should consider implementing mitigation strategies to minimise the impact of a strike.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have increased by 5.8% from $6,459/FEU to $6,836/FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have fallen over the last two weeks, decreasing by 3.7% to $9,129/FEU.
- Global container spot prices have risen over the last two weeks, and are now sitting at $5,049/FEU, a 0.25% increase over the last two weeks and a 247% increase from spot rates this time in 2023 according to the Freightos Baltic Index (FBX)
Air:
- Global Air Freight spot rates currently sit at $2.34, as rates continue to fluctuate according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $1.66 (100-3000kg), says FAX, increasing by 0.6%
- Europe to Asia, Greater China spot rates currently sit at $1.23(100-3000kg), says FAX, decreasing by 0%
That’s all for this week’s update…
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