Looming seaport strikes and potential U.S. mobility disruptions

There's a potential labor strike among U.S. seaport workers, which could lead to some major port congestion. According to CNBC, NYT, and Reuters, the impending ILA (International Longshoreman Association) strike is planned to start October 1 at U.S. ports on the East and Gulf Coasts. Shipping lines are already preparing for an expected major disruption. 

In the event that the labor strike actually takes place (which at this stage seems likely), shipping lines are anticipating lengthy delays to their services because of port slowdowns and rerouting of cargo. This will have a global impact on shipping beyond U.S. companies, since supply chains across Europe, Oceania, Latin America, and Asia would all be affected.

The upcoming strike is primarily about pay, and represents workers across all U.S. coastlines from Maine to Texas. According to media reports, the ILA is advocating for significant wage increases in the new six-year agreement, arguing that inflation has completely eaten into any raises and wages over the past six years. This strike at all East Coast and Gulf of Mexico ports would be the first for the ILA since 1977. 

Who will this affect?

Auto parts are also a key import on the East Coast and Gulf of Mexico, and shipments from Europe more difficult to reroute than those from China, according to logistics experts. Other delays could include shipments of machinery, fabricated steel and precision instruments. Three-quarters of the nation's banana imports from countries like Guatemala and Ecuador dock at ports on the East and Gulf Coasts. A strike also would affect container exports of soybeans, soybean meal, and other products and would have a significant impact on chilled or frozen meat and eggs. 

The U.S. also imports coffee and cocoa in large volumes, while exporting cotton. Lastly, more one-third of containers departing the U.S. with life-saving medication leave from the port in Norfolk, Virginia, while nearly one-third of containerized pharmaceutical imports enter the country through the port in Charleston, South Carolina.

About three-fifths of container shipments to the United States are transported through the East and Gulf Coasts, and according to logistics experts, it is not feasible for West Coast ports to handle the entirety or a significant majority of these shipments if they were redirected. While some shipments are currently getting diverted to West Coast ports, the ports of Long Beach and Los Angeles say they are handling at least as many containers as they did during the pandemic shipping boom of 2021-22. Experts are saying if the strike occurs, we can expect higher costs and big delays.

What about mobility programs?

Even a two-week strike could disrupt supply chains until 2025. There is a great chance that many international household goods shipments will be affected or delayed in some way, though it's impossible to predict whether delays will be minor or major. Mike Brannigan, President and CEO of The Suddath Companies, shares with us his personal insights:

Without a doubt, the global HHG business will not be immune from the impacts of the pending ILA strike. Shipments that are en route to the U.S. east coast and gulf coast affected ports that are not offloaded before the strike will most certainly face delays as cargo ships remain offshore pending the resolution of the strike and the subsequent challenges in re-starting operations will face inevitable delays. That will result in transferees not having access to their personal items for an extended and uncertain period of time.   

Beyond the costs and inconveniences associated with extended temporary living arrangements, companies will face additional charges from ocean shipping lines to cover the higher operational costs associated with the service disruptions.  Several major shipping lines have already announced “port disruption surcharges” ranging from $1500 for a 20’ container to $3000 for a 40’ container to cover these costs.  So,  there will be both a direct and indirect cost to employers and their transferees.

Relocating employees moving from the United States out of East Coast and Gulf ports will face similar challenges and potentially lengthy delays. Even if shipments can be re-routed through West Coast ports en route to their destination, there will likely be further delays due to more congestion from more volume being directed through those ports, both inbound and outbound. On top of this, expect additional shipping time and higher costs from the extended routing. Either way, employers and their international relocating employees should be prepared for extended delay times and higher costs if the strike begins as planned on October 1.

Please don’t shoot the messenger! The good news, if any, is that domestic transferring employees should not feel any impact from the strike and should expect the same level of service they are accustomed to.

While the strike could end up being resolved quickly, preventing the potential impacts we have described above, U.S. government officials have indicated that there is no intention to invoke a federal law to prevent the strike. Authorities are encouraging and even urging ongoing negotiations to get to a resolution and avoid the strike. 

For further reading on the various angles and reporting of the strike, try these other resources:

1. Economist offers perspective on possible longshoremen strike
2. White House Monitoring US Port Talks, Considering Supply Chain Impacts
3. More US ports reveal contingency plans as ILA strike deadline inches closer

And as a reminder, Mike Brannigan will be with us as a special gues for our Spotlight webinar on October 1, which would be Day 1 of the strike. Join us to learn more about this situation and a wide variety of other eye-opening perspectives on the household goods industry!