Although the port strike at the U.S. East and Gulf Coast ports may have ended in just 72 hours, the impact of the halt in the operation of 36 ports from Maine to Texas earlier this month is expected to linger, possibly into 2025.

At midnight on October 1, around 45,000 members of the International Longshoremen’s Association (ILA) launched its first coastwide strike since 1977. Union members set up picket lines at all the major ports on the Atlantic and Gulf Coasts, raising concerns of further supply chain disruptions as the industry continues to grapple with the ongoing conflict in the Red Sea and other geopolitical tensions.

However, after three days, the ILA and the United States Maritime Alliance (USMX) were able to strike a temporary deal, immediately ending the work stoppage at some of North America’s busiest ports. This was a sigh of relief to the industry, which was already bracing for the worst.

At the time of the deal, at least 54 containerships were waiting outside the ports to offload billions of dollars worth of cargo, as reported by supply chain risk management company Everstream Analytics. Market analytics platform Xeneta said that 44 ships were queuing to enter the affected ports, with over 120 more en route.

Peter Sand, the Copenhagen-based chief analyst at Xeneta, noted that a prolonged crisis on this scale would have been “toxic” for global supply chains.

“Closing all ports on the U.S. East Coast and Gulf Coast – even for just three days – comes with severe consequences,” he said. “We must now wait to see how quickly the returning workers are able and willing to deal with the huge backlog of ships waiting to offload thousands of containers carrying billions of dollars of goods.”

Sand believes the strike’s ripple effect will spread across global supply chains in the coming weeks, and that it could possibly be felt through 2025.

“The dozens of ships delayed on the U.S. East Coast and Gulf Coast will also be late arriving back in the Far East. This will impact schedules towards the end of this year and possibly into 2025 in the run-up to the Lunar New Year at the end of January, which traditionally sees an increase in goods shipped out of the Far East,” he added.

“You cannot miss a scheduled weekly sailing for a ship carrying 15,000 containers and not expect repercussions for carriers and importers,” the Xeneta chief analyst further said.

Backlog from the strike to take weeks to clear

Analysts said it would take several weeks to clear the backlog at the ports and reestablish the normal flow of goods, as work resumed on October 4.

Judah Levine, head of research at Freightos, told Asia Cargo News that the three-day shutdown was “enough to create a significant backlog of containers at ports and approximately 50 vessels waiting at anchor across East Coast and Gulf ports.”

“Many industry experts estimate a three-day backlog could take two or three weeks to clear,” he added, although pointing out that Port Authority officials in New York liken the short closure to that experienced during winter storms and think operations could return to normal in a “matter of days.”

Levine noted that ocean freight rates to both coasts had been easing in the lead-up to the strike and continued to do so during the closures, with rates more than 30% below highs reached in July, and this should continue to ease now that the strike is over.

“With the strike over and peak season demand largely behind us, container rates should continue to ease on the seasonal lull in volumes between peak season and Lunar New Year, though East Coast congestion caused by the strike may slow the pace of the decline while operations recover,” he told Asia Cargo News.

Levine also pointed out that ocean carriers had announced surcharges – ranging from US$1,000/FEU to US$4,500/FEU – in anticipation of disruptions due to the strike. However, as most of these would only have gone into effect in mid-October or later, they hadn’t impacted spot rates yet, and carriers have suspended these new charges.

“As long as Red Sea diversions continue to absorb capacity across the market, though, we should not expect rates to fall below the floor reached back in April when transpacific rates fell to US$3,000/FEU to the West Coast and US$4,000/FEU to the East Coast – about double typical levels,” Levine added.

Impact on air cargo

Meanwhile, Levine also noted the impact of the port strike on air freight operations, with Europe-North America air cargo rates increasing 4% to US$1.77/kg since early September, “possibly reflecting some shift of trans-Atlantic ocean volumes to air.”

“The strike did lead to some ocean-to-air shift reflected in climbing rates on some lanes, and we may see some continued pressure on air cargo rates as some importers continue to expedite some essential inventories until ocean operations stabilize,” Levine said.

Levine said trans-Pacific air cargo rates did not climb much in the lead-up to the strike, but once the strike started, daily rates in China-North America jumped to US$7.07/kg from US$5.91/kg the previous week.

“Rates may be increasing due to the strike and are climbing from an already elevated floor set by the surge of ecommerce volumes out of China that have kept rates around US$6/kg – even higher than rates get during the typical Q4 air peak season months – for most of the year,” he added.

Levine said that Dubai-North America air cargo rates were also up to US$3.12/kg in the last few days, 30% higher than in mid-September. He noted that this may reflect some ocean-to-air freight from Asia to the Middle East and air cargo from the Middle East to North America, a shift from the strike.

“Rates for these lanes remained at about these levels through the end of the week, suggesting that pressure on air cargo rates from the strike may be sustained until ocean operations on the East Coast recover,” Levine told Asia Cargo News.

The ILA port worker strike ended on October 3 after the union accepted a 62% wage increase over the next six years and agreed to extend the expired contract until a January 15 deadline to resolve the remaining sticking points, with the role of port automation chief among them.

But Sand of Xeneta warned that the market will remain challenging in the weeks and months ahead as the ILA and USMX – which represents employers of the East and Gulf Coast longshore industry – tackle the automation issue.

“There has already been a financial impact for shippers through increasing freight rates on trans-Atlantic trades at a time when markets on other major trades out of the Far East remain elevated due to conflict in the Red Sea,” he said.

“It is good news the strike has ended, but shippers are not out of the woods just yet. It is only a tentative agreement, and automation at ports will remain a major stumbling block. Automation is an issue the two sides have been unable to resolve in over a year of negotiations – now they have just 100 days to reach an agreement; otherwise, we could see further strike action,” Sand said.

By Charlee C. Delavin

Asia Cargo News | Hong Kong