A potential Oct. 1 dockworker strike on the East and Gulf Coast ports has already been swinging more U.S. imports westward, but the wider impacts on the economy and the ports themselves will likely hinge on the stoppage’s duration.
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“If it’s just a few days, it’ll have a minimal impact on the overall economy, especially with the mitigation steps already taken,” said Paul Bingham, director of transportation consulting for S&P Global Market Intelligence, during a media briefing with The Port of Los Angeles. “However, if there’s a strike in place and it lasts a longer period of time, there’s some trade that’s unable to be fully mitigated—for example, fresh produce.”
The duration will likely determine the ports’ ability to get back to normalcy after a work stoppage concludes. After a strike ends, workers would have to handle the excess buildup of containers on top of the normal cargo flowing into the ports.
Based on historical data, maritime trade advisory service Sea-Intelligence estimates that East and Gulf Coast ports will handle 2.3 million 20-foot equivalent units (TEUs) in October. The firm predicts they could increase their ability to move excess cargo capacity by 13 percent that month based on the maximum number of containers the ports have handled.
“As we estimate the East Coast ports to have 13 percent excess capacity over the expected normal flow of 2.3 million TEU in October, then it would take six days to clear the backlog from one day of strike,” according to Alan Murphy, CEO of Sea-Intelligence.
Although more-than-estimated capacity could shave off one or two days of backlog, the general trend doesn’t bode well for a strike that lasts more than a few days, Murphy pointed out.
“This means that a one-week strike in the beginning of October would not be cleared until mid-November,” said Murphy. “If we get a two-week strike, then realistically, the ports would not be back to normal operations until we are into 2025.”
On a more positive note, Bingham said a long-duration strike was unlikely.
“We believe in an election year the political pressures will be extreme on both sides to negotiate a settlement,” said Bingham, who also highlighted that there will be pressures to support the negotiations on a federal level, similar to when Acting Labor Secretary Julie Su helped facilitate discussions that helped broker a six-year contract for the West Coast port dockworkers last year.
Those West Coast ports have reeled in diverted cargo in spades as the drama between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) unfolds, if the numbers from the Ports of Los Angeles and Long Beach are any indicator.
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The Long Beach port brought in 435,081 TEUs of inbound cargo in July, a whopping 60.5 percent higher than the year before, when the port saw 271,086 TEUs enter its gates. The gateway has moved 25 percent more inbound containers in the year to date—2,522,424 TEUs—than the 2,018,026 TEUs handled in the first seven months of 2023.
At Los Angeles , loaded imports totaled 501,281 TEUs in the month, up 37.6 percent from the 364,208-TEU throughput in July 2023. For the January-to-July stretch, the port has handled 5,671,091 TEUs at the port, up 17.6 percent from 2023 year-to-date of 4,821,670 TEUs.
“We’re not seeing the same pace of growth at some of the other ports where shippers and supply chain managers are deliberately trying to reduce their risk of exposure, especially on the East and Gulf Coast ports during 2024,” said Bingham.
In the most recent update to the labor negotiations between the ILA and the USMX, the union said in a Friday statement that negotiations were “very far apart, particularly on economic issues.” The union was in response to the USMX update on the master talks, which the maritime employers said offered “industry-leading starting wages” and retained “the existing technology language” for the automation framework.
Although Maersk CEO Vincent Clerc had previously said he thought a dockworker work stoppage was “highly unlikely,” the ocean freight giant acknowledged the possibility of a strike in a recent update on the North American market.
“Disruptions may be localized or more broad-based,” the Friday update read. “Should a general work stoppage occur on the U.S. Gulf and East Coasts, even a one-week shutdown could take four to six weeks to recover from, with significant backlogs and delays compounding with each passing day.”
The carrier said it would assist customers via alternate routes, modalities or distribution schedules in the event of disruptions.
Hapag-Lloyd CEO Rolf Habben Jansen wasn’t as optimistic as his fellow ocean carrier chief.
“In terms of the East Coast, if you would have asked me in January, I would have said that I’m not so worried about that,” Habben Jansen said during a Wednesday earnings call. “Right now, when you look at the strike threat that is out there, I think that unfortunately, the chances that there will be some disruption have definitely gone up.”
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