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After Canada’s national railway was shut down, US seaports could be attacked Hurricanes along the East Coast and in the Gulf of Mexico have the potential to further disrupt supply chains.
this International Longshoremen’s Association The ILA, which represents about 45,000 longshoremen at more than 30 seaports from Texas to Maine, has threatened to strike on Oct. 1 if they cannot reach an agreement on a new contract with the U.S. Maritime Alliance (USMX), a group of shipping lines.
Experts warn that port shutdowns could lead to cargo backlogs for weeks or even months, with impacts far beyond the United States.
“A port strike on the East Coast would certainly be devastating to our supply chain in North America,” said Fraser Johnson, a professor at Western University’s Ivey Business School who studies supply chain management.
A large amount of Canada’s imports are imported through U.S. ports, and the port throughput of the U.S. East Coast ports far exceeds that of Halifax and Montreal, the main shipping points in Atlantic Canada.
The Port of New York and New Jersey, the East Coast’s largest port, moves about $300 billion worth of goods each year and moved 7.8 million twenty-foot equivalent units (TEUs) last year. By comparison, the Port of Montreal is expected to handle 1.5 million TEUs in 2023, and the Port of Halifax will handle just over 546,000.
An economic study conducted last year by Martin Associates The Port of Montreal is estimated to handle $151.2 billion worth of cargo annually, while the Port of Halifax does not calculate those dollar values.
Johnson said the two ports were struggling to receive even a small portion of the cargo that normally comes through the United States, in addition to regular cargo traffic.
What impact will it have?
If the eastern U.S. ports are closed for even one day, the impact will be severe.
Analyst at Copenhagen-based shipping consultancy Sea-Intelligence Expected this month It could take four to six days to clear the backlog from a one-day strike.
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Analysts predict that a week-long strike in October will not end until mid-November, while a two-week strike could mean the port will not resume normal operations until 2025.
Global shipping giant Maersk Group (a member of USMX) has given a similar estimate. US market update early August It warned that there would be “significant” compound delays in the event of a strike.
Those backlogs could occur as supply chains fully recover from a four-day shutdown of Canada’s main railways. Although trains resumed running on Monday, Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. said it would take weeks for freight traffic to fully resume.
In 2023, longshoremen in British Columbia went on strike for 13 days. The Port of Vancouver said last week that It will take months to clear the backlog, and a return to normalcy will be difficult as goods are delayed and infrastructure is overwhelmed.
The global shipping industry is also facing other challenges in the near future, including Panama Canal drought continues forcing authorities to reduce the number of ships passing through this key trade route, and Red Sea container ship attack Conflict in the Middle East This led to costly rerouting.
In the process, inflation has caused shipping and freight costs to soar since the outbreak of the new coronavirus pandemic, and workers are looking to ensure their wages can keep pace.
“These are not normal times,” Johnson said.
The National Retail Federation told Reuters Retailers such as Walmart and Target are rushing goods into the U.S. to prepare for potential strikes and prevent shortages during the holiday shopping season.
Volumes at West Coast ports have increased, which analysts say reflects uncertainty over labor disputes on the East Coast — the opposite of what happened last year during difficult contract negotiations for Western U.S. dockworkers.
The International Longshore and Warehouse Union (ILWU) finally approved a new six-year contract that includes a 32% wage increase over that period, retroactive to 2022, and enhanced benefits. The ILA is currently working on a similar deal.
In a letter this month to WWU President Harold Daggett, WWU International President Willie Adams said the union “stands in solidarity with the WWU.” East Coast unions have spoken out publicly.
What stage have the negotiations reached now?
Negotiations between the ILA and USMX broke down this summer, but are expected to resume in the weeks leading up to the strike deadline. Both sides have requested federal mediation, and the union has scheduled a wage table meeting for early September.
The International Association of Ports and Harbors has harshly decried the threat that automation poses to port jobs. USMX said in early August Its latest proposal “preserves existing technical language that creates a framework for how to modernize and increase efficiency while protecting jobs and work time — a priority for our members and the ILA,” while also improving pay and benefits.
Daggett accused USMX — whose members also include global industry leaders such as Hapag-Lloyd, MSC and Docker — of “making billions of dollars off the backs of dockworkers” and appeared determined to follow through on his threat to strike.
“Don’t mess with the maritime unions around the world, we will shut down your unions,” he told the International Chamber of Shipping conference last year.
Daggett’s salary last year was $855,000. According to the U.S. Department of Labor documents.
Analysts say labor disruptions in Canada’s rail industry and at U.S. ports demonstrate the need to designate business activity in all sectors as an essential service. Ports are not covered by the U.S. Railway Labor Act, which ensures rail activity is not interrupted in the event of a strike, while Canada has no legislation of its own to do so.
“This is causing problems for shippers, exporters and importers and ultimately driving up costs while there is uncertainty,” Johnson said.
“Ultimately, these costs are passed on to consumers.”
— Information from Reuters
© 2024 Global News, a division of Corus Entertainment Inc.
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