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Supply Chain News: Port unrest looms

May 2024

Importers brace for potential East Coast port strike

Just six months after a contentious, 13-month port strike impacted 29 West Coast ports, the nation is bracing for an East Coast port strike that could send supply chains into another tailspin during the peak holiday shopping season. This is one more reminder of the growing power of the labor movement at a time when consumers are increasingly focused on convenient retail experiences, including those that rely on workers to ship and deliver goods to their doorstep.

What’s at stake?

  • Container volume — The movement of millions of containers of goods from around the globe into the North American port network.
  • European imports — The flow of nearly one-quarter of the U.S. containerized volume of imports from Europe
  • Holiday buying — The stable flow of retail goods during the busy summer-to-fall holiday buying season
  • Exports of energy sector, automotive goods – Including goods for growing green energy initiatives and the automobile industry

Importers shift as East Coast port strike looms

With the East Coast emerging as the top gateway for imports coming from Asia through the Panama and Suez canals — and a preferred route for retailers tapping into growing population centers in the Sunbelt and the Southeast – even the threat of disruption has importers scrambling. The timing of a strike sets up retailers to move quickly to evaluate and likely shift trade routes to get ahead of any port disruption. Here’s why:

  • East Coast ports handle a diverse range of goods, from automotive parts to pharmaceuticals to myriad home supply and retail goods.
  • Ports from New York/ New Jersey to Miami and Houston provide connection to some of the largest metro areas in the country.
  • The strike could get underway in the final months of the presidential race and during the retail industry’s big push toward holiday shopping and deliveries.

What’s on the bargaining table?

The International Longshoremen’s Association (ILA) contract, set to expire at the end of September, covers pay and other labor issues for 70,000 dockworkers on the East Coast. This is the first East Coast port strike since 1977 and it is expected to impact port activity along the East Coast and into the Gulf Coast, including at three of the five busiest ports in the U.S., with a combined volume of 15 million TEUs (the standard container measurement) in 2023. The three busiest East Coast ports include:

  • The Port of New York and New Jersey
  • The Port of Savannah, GA
  • The Port of Houston

The union is riding the wave of labor uprising in recent years, including:

  • The 2023 Teamsters’ contract with 340,000 UPS workers that secured increases in wages and benefits, and improved working conditions, totaling $30 billion over five years.
  • Disruption from the threat of a 2023 UPS strike, which was averted ahead of the busy holiday shopping season.
  • The 2023 United Auto Workers’ strike, which lasted 46 days and caused disruption to production across the Big Three automakers, resulted in large pay increases and other benefits for workers.

Who wins with port shifts?

In the short-term, an East Coast labor strike is likely to shift volume back to the West Coast ports, which have not regained their activity following their recent strike. Given the growing prominence of East Coast ports and their reputation for moving goods efficiently and without the disruption that periodically impacts West Coast ports, this is a critical time of reckoning. A strike this fall could deliver a crippling blow to the port system just ahead of the holidays and the general election.

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