Critical Info Regarding Potential Port Strikes
To our valued customers,
Please see below information regarding port strikes that may begin October 1st
The contract negotiations between the ILA (International Longshoremen’s Association) and the USMX (United States Maritime Alliance) suddenly broke down after 20 minutes of discussions on the first of three days of scheduled negotiations. Due to this sudden end, local and regional contract discussions were also quickly suspended. The current contract between the ILA and USMX is set to expire on September 30, 2012; and if a resolution cannot be attained by then there is a serious threat of port strikes at East and Gulf Coast ports.
Unfortunately, the ILA President, Harold Daggett, has stated that a strike seems likely once the current contract expires despite previous positivity surrounding the scheduled three day negotiations. Hopefully this issue will be resolved well before September 30th; however, since this date is quickly approaching, it is important to prepare for and be aware of what port strikes may mean to you and your company.
Below are 10 areas that may see effects of port strikes come October 1, 2012.
1. All Water from Asia:
We would expect all east coast importers to look at their projections and
consider moving freight to a west coast D/C (if possible) for distribution
or transloading to domestic truck. MLB service is also a possibility. If
there is no resolution in the next week or two, you may see ocean carriers
skip all water rotations that would have arrived the first week in October.
2. West Coast:
From Asia, vessels to the west coast are currently
running at about 95% of capacity. Any sudden shift of volume from the east
coast to the west coast will create immediate space issues –
especially to southern California. Vessels servicing the PNW lane (Tacoma
and Seattle) are less full and may be a better option. Overall, it would
be impossible for the west coast services to suddenly absorb a large
percentage of all water cargo that will be rerouted immediately.
3. IPI Services:
For those customers who are already moving freight
inland by rail to Chicago, Kansas City, and elsewhere, you will most likely
experience space issues as east coast importers shift their cargo (many
have already started doing this) to west coast ports.
4. September 10 GRI:
Carriers have filed a GRI effective early September
($500/40′ to the west coast, $700/40′ IPI and AWE) from Asia to the United
States. If the market situation does deteriorate, the chances this
increase gets fully implemented will certainly increase.
5. Air freight:
With the launch of the new iPhone, iPad Mini,
and new Samsung smartphones coming in September, air space was already
predicted to be tight. If indeed there is a strike on the east coast,
air capacity will certainly become more critical.
6. Canada as a Gateway:
Prince Rupert, Vancouver, and Halifax are
certainly options for some and need to be considered (see below re union
7. Presidential Election:
This of course is an election year so there
will be tremendous political pressure to get these issues resolved to avoid
any major disruption to the east coast trades and overall economy a month
before the election.
8. WC Truck Capacity:
Capacity is already tight on the west coast as
we are in the middle of our traditional peak season. For some east coast
importers it may be advantageous to look at services to Kansas City or
Chicago (via Canada) and then transload and truck to the east coast from
9. Export Trades:
Any disruption in predictable equipment flows
is going to impact exporters who already struggle with this. In addition,
if indeed we see vessel strings skip the east coast in October, getting
product out of the country in October via east coast ports will be
10. Union Affiliation:
There is uncertainty whether other
dockworkers in Canada and on the US West Coast will honor any strike or
disruption, if indeed we experience a strike on October 1.
We encourage you to contact us immediately if you foresee these potential port strikes having any impact on the shipment of your freight. Once aware of any concerns, we will work with you to create the best solutions possible in the event that these port strikes do occur.