US East Coast Strike Could Disrupt Global Shipping

A potential strike at US East Coast ports could disrupt the global shipping industry, with lengthy recovery times and significant challenges for supply chains and freight rates.

Port of New York & New Jersey

Port of New York & New Jersey ( Source: Port of New York & New Jersey)

A potential strike at all US East Coast and Gulf Coast ports is expected to cause significant disruptions to the global supply chain, creating major problems for shipping stakeholders around the world.

As operations at 36 major US ports – which handle 40-50% of the country’s imports and exports – face the possibility of shutdown by October 1, the global shipping industry is under strain.

“If the strike does occur, we have reason to envision a detrimental effect on shippers of US-bound goods,” said Han Deng, shipping partner at law firm Reed Smith. “Not only will there be a potential surge in freight costs, but we also anticipate it impacting the ability of retailers to meet the demand for winter holiday operations in the US.”

Notably, in 2023, a single day of closure of US West Coast ports caused three weeks of delays, with inventory holding times increasing by up to 148%, according to supply chain platform Project44. Reports suggest that a potential East Coast strike could last longer, possibly several weeks. Project44 estimates that recovery could take four to six weeks for each week of port closure. Similarly, Danish data firm Sea-Intelligence predicts that a single day of strike by the International Longshore Workers Association (ILA) would take five days to recover.

“The effect of such a strike could last long even after it is resolved, with the disruptions mentioned above taking weeks or months to recover, in a high inflation economy with regional conflicts and geopolitical uncertainty,” Deng noted.

With the peak shipping season already underway, Project44 analysts believe it is too late to divert cargo volumes to the West Coast, jeopardizing holiday season inventories and prices.

Deng also noted that the Port of New York & New Jersey would be among the ports most severely affected by the strike. According to the nonprofit research organization Mitre, the major US port could lose about $640 million per day.

“It is no surprise, then, that the Port Authority of New York & New Jersey is trying to increase operations as much as possible ahead of the looming deadline,” the shipping lawyer pointed out. “This includes encouraging shippers to delivery as much cargo as possible and coordinating with partners across the supply chain.”

According to the port authority, about $240 billion in cargo passes through the port each year.

“As we have witnessed massive backlogs at ports, supply chain disruptions, delayed shipping schedules and altered shipping routes through recent history, such as the Covid-19 global pandemic and the March 2024 Baltimore Bridge collapse, similar things would happen again,” the attorney said.

While it is difficult to make direct comparisons between periods, it is worth noting that the last ILA strike on the US East Coast in 1977 shut down ports for 44 days.

Source: Phaata.com (via Container-News)

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