Eastern US ports prepare to shut down and labor talks stall

Key industry and government officials are urging US dockworkers and their employers to avoid a strike at East Coast and Gulf ports this week, even as many facilities are already preparing for a shutdown.

“We are coordinating with partners along the supply chain to prepare for any potential impact,” said Steve Burns, a spokesman for the Port Authority of New York and New Jersey, the nation’s busiest Atlantic gateway for containers. “We urge both sides to find common ground and maintain the flow of goods for the good of the national economy.”

The US Maritime Alliance, a group that represents ocean carriers and port terminal operators, and the International Liquidators Association have no talks planned before their contract expires at the end of the month.

President Joe Biden said Sunday that he will not intervene in any pickpockets’ strike. Resolving the dispute is a matter of collective bargaining, he told reporters in Delaware.

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In a statement released on Sunday, ILA chief of staff James McNamara said the union “stands in solidarity with tens of thousands of dock and maritime workers around the world,” adding that it would update the public with any new developments by Monday at 11:00 am. New York time.

The standoff sets the stage for a strike to begin the next day, forcing ports with the combined capacity to handle up to half of all U.S. trade volumes to halt container shipments and car shipments. Energy supplies and bulk cargo such as municipal waste and road salt will not be affected and some exceptions will be made to allow the movement of military cargo and cruise ships.

To help break the impasse, the Biden administration on Friday summoned the USMX, as the employers’ group is known, to the White House for a meeting with senior officials to urge a return to negotiations and said they had been in touch with the union relaying the same message.

Those efforts continued over the weekend, White House spokeswoman Robyn Patterson said Sunday. She said senior officials “have been in touch with USMX representatives, urging them to reach a fair and swift agreement — one that reflects the companies’ success.” Officials sent the same message to the ILA, Patterson said.

A White House official, speaking on condition of anonymity, said the administration will also monitor shipping rates and surcharges imposed by ocean carriers and does not want to see anticompetitive price moves. The two largest container lines have already announced plans to impose additional charges related to work stoppages.

If a strike goes ahead, it would be the first major labor disruption at US shipping hubs since a nine-month standoff in 2014-2015 slowed activity and reduced productivity at West Coast ports . The last ILA strike on the East Coast was in 1977.

USMX now claims the union has refused to bargain since it called off talks in June and has asked the National Labor Relations Board to force dockworkers to bargain. The ILA wants assurances against automating job cuts and counters that its members are owed a bigger cut of the “billions of dollars in revenue and profits” that shipping lines have made in recent years.

Biden bills himself as the most pro-union president in history, and his administration has said it won’t intervene if the ports close. “We have never invoked Taft-Hartley to call off a strike, and we are not considering doing so now,” Patterson said at the White House on Thursday.

Economic pressure for federal intervention will only build if major gateways are paralyzed for more than a few days. Oxford Economics has estimated that a strike would cost the US economy between $4.5 billion and $7.5 billion a week — a hit to gross domestic product that will be reversed once it ends and supplies resume.

However, analysts said the consequences of even a short strike would be costly for many retailers, manufacturers and other importers heading into the fourth quarter. Even with supply chains running relatively smoothly, every week that goods are stuck and delayed will last a month, in part because ports like Los Angeles and Long Beach, Calif., are already operating close to capacity.

Quickly “over”

“Emergency routes could become overwhelmed very quickly,” CH Robinson Worldwide Inc., one of the largest U.S. freight brokers, said in an alert last week. “A significant shift in volume to the U.S. West Coast would not only challenge ports, but also rail services, which could require more use of trucks and transportation services.”

According to Oxford Economics, East and Gulf coast ports are major players in handling exports and imports of raw materials, including copper, cotton, tin and timber, as well as base metals used in manufacturing.

In the auto sector, although only 32% of all vehicles and parts are imported through the strike-threatened ports, Oxford Economics said it would “cause problems for European carmakers” given the transatlantic trade route and few viable alternatives.

Ports, meanwhile, were preparing to scale back operations on Monday, with some — such as New York-New Jersey — offering extended cargo pick-up hours. Near Norfolk, the Port of Virginia said it would cease marine operations at 1 p.m. local time on Monday, and Port Houston in Texas plans to close at 7 p.m. In Boston, the vessel’s last operation is scheduled to end at 8:00 p.m., unless there is a labor contract. reached.

Higher shipping costs

For shippers and carriers, idle ships, delivery delays and higher costs were among the contingencies as alternative routes are limited. In Canada, two major terminals in the Port of Montreal operated by Terminal Termont Inc. will close this week as union dockworkers prepare for a three-day strike starting Monday.

MSC Mediterranean Shipping Co. SA said in an advisory that “booking adjustments, including rolls to other ships or cancellations, may be required” if the ports are closed.

MSC also imposed an “emergency operations surcharge” of $3,000 per 40-foot container, effective Oct. 27, for shipments from Asia to the US East and Gulf Coasts. This was similar to a surcharge, which will take effect from October 21, that Denmark’s AP Moller-Maersk A/S announced earlier this month.

Hapag-Lloyd AG, the world’s 5th largest container carrier, also warned that industrial action would increase shipping rates.

“Transportation costs, including freight, storage and transportation rates, are expected to increase due to increased demand for alternative routes and port services,” the Hamburg-based carrier said in a note published on its website. “Emergency surcharges may also apply to account for additional handling and congestion.”

A strike threatens major Eastern and Gulf Coast ports | Union dock workers threaten to walk off October 1st

Still, Wells Fargo economists Tim Quinlan, Shannon Seery Grein and Nicole Cervi said concern about the fallout from a strike may be overstated, in part because inventory levels have been renewed and also because political resistance to government intervention will disappear as the strike progresses.

“Doomsday reporting of major shortages and disruptions overstates the scope of potential disruption,” they wrote in a research note on Friday. “Disruption and controlled chaos have been the norm in the global maritime business during the current expansion, and we see reason to believe that companies will be able to weather this storm.”

Top photo: Shipping containers stacked at Newark Harbor in Newark, New Jersey, USA. Photographer: Michael Nagle/Bloomberg.

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