U.S. East Coast ports may close on Tuesday, with daily losses reaching up to $5 billion.
The International Longshoremen's Association (ILA) announced today that it will launch a strike at ports along the U.S. East Coast and the Gulf Coast this coming Tuesday.
The ILA's strike stems from dissatisfaction with the U.S. Maritime Alliance (USMX), with the union's strike declaration emphasizing that dockworkers have been enduring "wage suppression" for decades. The Oxford Economics Institute stated in its latest report that the strike could involve up to 45,000 port workers, affecting port shipping volumes that account for approximately 60% of the total U.S. shipping volume.
If the strike proceeds as planned, it will be the ILA's first action across the entire coastline since 1977, impacting ports from Maine to Texas.
JPMorgan Chase indicated that the container import cargo volume handled by East Coast and Gulf Coast ports accounts for about half of the total U.S. import cargo volume. If these ports close, it could cost the U.S. economy up to $5 billion in daily losses.
The anticipated strike is continuously driving up freight costs.
According to data provider Xeneta, as small businesses rush to import goods to replenish their inventory before the strike, the average cost of shipping a 40-foot container from Northern Europe to the U.S. East Coast has risen by 29% since the end of August, reaching $2,376 under short-term contracts.
Xeneta's Chief Analyst, Peter Sand, stated that the cost of goods from Asia has not increased during the same period, but this situation may change if the strike continues.
Moreover, if the strike takes place as scheduled and exacerbates the phenomenon of goods being stranded at ports, it will further drive up freight rates.
Douglas Kent from the Supply Chain Management Association commented:The reality is that the overall port infrastructure in the United States is not prepared to handle a long-term shift of cargo volume equivalent to that of 36 ports to the West Coast...
It is pointed out that the current situation coincides with the eve of the holiday shopping season, and any port congestion could limit the supply of ships and increase freight costs, which would ultimately be passed on to American consumers.
Mia Ginter, head of North American ocean freight at freight group CH Robinson, said:
"Other points of entry into the United States will not be able to handle the large volume of goods, and the entire supply chain will be overwhelmed. The longer the strike lasts, the more costs will be passed on to consumers."