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Strike cripples US East Coast

[ October 1, 2024   //   ]

With US East Coast and Gulf ports crippled by an International Longshoremen’s Association (ILA) strike on 1 October, freight forwarders and shippers are scrambling to find alternatives.

Cargo already at or arriving at affected ports is stuck with no immediate resolution in sight, while some shipments are being offloaded at alternative ports in Mexico or Canada, according to the  Freightos platform. According to pone forwarder contacted by FBJ, ship operators were meanwhile anchoring vessels outside ports, presumably in the hope that the situation would be resolved within a few days. However, even with a speedy resolution, the after effects of the stoppage are likely to last for weeks, so disruption is inevitable.

Alternative routings include Canadian east coast ports, but these are unlikely to have sufficient capacity, especially as the major gateway of Montreal is grappling with its own strike. Mexico is also being considered as an alternative, but port capacity is limited, as is that of the border crossings with the US.

Other alternatives include shipping via the Panama Canal to the West Coast, but Freightos warned that a prolonged strike would probably result in congestion and delays, stretching port capacity and leading to significant challenges in this region too.

Meanwhile, the International Transport Federation said that 36 ports on the East Coast in the first ILA strike since 1977. The dispute is over pay and job protection if automated cranes are brought into service.

Air and ocean freight anaysts Xenta however rebutted an ILA claim that the strike had let to an increase in North Europe to East Coast rates to $30,000 per container.

It said that while average spot rates have increased 50% since the end of August, they are still only $2,800 per FEU.

Xeneta chief analyst Peter Sand said the union was “muddying the waters with misinformation”.

He added: “This claim by the ILA must be corrected because we have seen in the past how rumor and false information causes panic in the market and spiralling freight rates as shippers rush to protect supply chains. If a shipper does not have access to data to benchmark their own freight rates, they may believe the ILA’s claim of $30,000 per container and the market enters a vicious circle of higher and higher rates being paid.”

Nevertheless, Xeneta acknowledged, with more than 40% of containerized goods entering the US through the East and Gulf Coast “this strike will cause carnage across supply chains and damage the US economy. Now is the time for cool heads and diplomacy rather than scaremongering and fake news.”

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