Port strike threatens to paralyze east coast supply chains

Late last week, the CEO of Flexport – one of the largest US supply chain logistics operators – warned that “the biggest wild card in the presidential election that no one is talking about? The looming port strike that could shut down all East Coast and Gulf Coast ports just 36 days before the election.”

With just over a week until D-Day, authorities are bracing themselves as a threatened strike by dock workers at East Coast and Gulf Coast ports looms.

The Port Authority of New York and New Jersey is “coordinating with partners along the supply chain to prepare for any impact” from a possible stoppage by workers represented by the International Association of Shippers as it negotiates with the Maritime Alliance of States Unite (USMX), a spokesman for the Port Authority said CBS MoneyWatch Friday.

“We urge both sides to find common ground and maintain the flow of goods for the good of the national economy,” the spokesman added. noting that $240 billion in goods moves through the two ports each year and that such trade supports more than 600,000 local jobs.

According to the union, a strike would affect ports from Maine to Texas and cripple supply chains worse than immediately after the shutdown of covid. A shutdown – the first since 1977 – could involve up to 45,000 workers at ports that account for about 60 percent of US shipping traffic, leading to a major disruption to shipping, Oxford Economics said in a report.

“Even a two-week strike could disrupt supply chains until 2025“, Grace Zwemmer, an American economist associated with Oxford, said in the report.

As Rabobank’s Michael Every adds, “US businesses may miss the peak Black Friday/Cyber ​​Monday sales period. The port’s trade is about $2.12 billion, and 72 percent would stop, a one-day strike should recover from six days, a week-long strike in October creating gridlock until mid-November. without taking into account the disruptions in the Red Sea caused by the non-terrorist Houthis”.

If cargo is then forced to move to US West Coast ports, Rabobank speculates that Asia-US freight rates could rise to $20,000, well above the peak seen in the last supply chain crisis. This would mean that firms with low margins could choose not to import at all, creating empty shelves.

The ILA has threatened to strike if a new labor agreement is not reached with the East Coast port terminal and shipping companies represented by USMX by the time the current contract expires on October 1. Although the parties continue to negotiate, the odds of a rare strike that threatens to shut down some of the nation’s busiest ports are growing.

“There will be a shutdown, assuming no intervention, at midnight on Monday the 30th,” Bethann Rooney, director of the Port Authority of New York and New Jersey, the nation’s second-busiest port, said in – an earlier briefing. week.

If that were to happen, all loading and unloading of cargo containers and automobiles would stop, while cruise ships would continue to operate, Rooney said.

The Port Authority is not involved in negotiations between the ILA and USMX, but rather leases port space to shipping companies. Terminal operators and ocean carriers are “working to bring in as many ships as possible” before a possible withdrawal, Rooney said.

Those steps include “working with truckers and rail carriers to get as much cargo out as humanly possible, as quickly as possible,” the port director said.

The two ports currently unload about 20 large container ships a week and expect 150,000 containers to be unloaded before the strike deadline, Rooney said.

“At the same time, ocean carriers are beginning to essentially embargo export goods ‘so they don’t enter East Coast and Gulf ports and then stay there.’ she said.

Container ships carrying imports bound for Newark and Elizabeth in New Jersey and Staten Island in New York City will dock at certain locations in New York Harbor or offshore during the strike or remain at sea until they can enter. The Coast Guard and U.S. Customs and Border Protection were to monitor ships arriving at port facilities once a strike ended.

The ILA union walked away from the bargaining table in June, saying a type of automation introduced at the Port of Mobile in Alabama violated the current contract.

Based in North Bergen, New Jersey, the ILA represents 85,000 workers on the East and Gulf Coasts. The union is demanding substantial wage increases for its members, as well as protection against “job-killing” automation.

USMX said it was unable to schedule new bargaining sessions with the union.

“It is disappointing that we have reached this point where the ILA is unwilling to reopen the dialogue unless all of its demands are met,” USMX said in an update on Tuesday. “The only way to resolve this impasse is to resume negotiations, which we are willing to do at any time.”

While the Taft-Hartley Act gives the president the power to impose an 80-day period to delay a strike, Biden said he did not plan to use it here, given the impact it could have on union votes; though with the Teamsters refusing to endorse Kamala despite the union’s traditional Democratic support (as most of its members voted for Trump), this may be a moot point.

On the other hand, Every cautions that the type of blow described above would likely hurt Harris’ chances on November 5.

By Zerohedge.com

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