The prospect of an ILA strike at the US East and Gulf ports on October 1 continues to grow, according to a new Freightos analysis, as both sides refuse to talk to each other with two weeks left before the deadline.
Judah Levine, head of research at Freightos, said the union and the USMX port operators remain at odds over wage increases and port automation, and East Coast ports are already taking steps to wind down operations.
"There is speculation that a strike could target Maersk terminals in Mobile, Alabama, that have introduced automation despite ILA objections. But even in the event of a limited strike, USMX bylaws would require a lockout across their ports," the report said.
Levine noted that the ILA president has hinted that ILWU members at West Coast ports could strike or decline to service diverted vessels from the East Coast in solidarity.
However, as the ILWU's recently signed contract makes intentional labour actions illegal, the analysis said operators could quickly end such actions through injunctions.
"Another question is how the White House might respond to a strike. Especially in an election year, the vocally pro-labour administration may be hesitant to end a strike via the Taft-Hartley Act," Levine added.
He noted that the White House likely also wants to avoid the economic impact of a prolonged shutdown, leading many to imagine that an ILA strike would, in one way or another, not be allowed to last more than a week.
"At the same time, the ILA has implied that, if forced back to work, union members could continue to disrupt operations through intentional work slow-downs similar to those employed by the ILWU last year," he further said.
Proposed clampdown on de-minimis exception
Meanwhile, the Freightos analysis said in air cargo, the surging volume of e-commerce packages out of China had been the biggest driver of strong demand, tight capacity and elevated rates for much of the year.
Levine added that some carriers are shifting capacity from lower-volume regions like South America, South Asia and Africa to the transpacific and Asia-Europe lanes — which will reduce capacity and could push rates up on those secondary lanes as a result — in anticipation of an extremely busy Q4 as demand for both e-commerce and more typical goods increases during air's peak season.
"This new trend of e-commerce goods moving cross-border directly to consumers on a massive scale — and its implications for air cargo — has really been facilitated by the use of the de minimis exception," the Freightos head of research said.
These low-value e-commerce goods can quickly be shipped via high-cost air cargo because platforms like Temu and Shein can import them under the de minimis exception, which exempts low-value imports from tariffs, high customs costs and reporting requirements.
"This week, though, the White House announced plans to issue new rules by executive order that would close the de minimis exception to any goods subject to certain US tariffs, covering about 40% of all imports and about two-thirds of all goods from China," Levine said.
"In a recent Freightos interview with Adam Lewis, president of customs broker Clearit, Chinese goods make up about 70% of all de minimis imports, and the changes laid out by the White House would 'really turn everything on its head,'" he added.
Tariffs for these goods range from 7.5% to 25% of the value of the import, but the bigger blow to exporters would be in the radically more extensive filing requirements and processing costs that regular imports face.
Levine pointed out that these costs would explode from eight to fifteen cents per package under de minimis to US$15-US$50.
Additional time needed to clear customs would mean delivery times would go from a week or less to two to three weeks, additionally challenging the viability of sending low-value goods directly to customers from abroad.
"Lewis speculates that ultimately the changes to de minimis may not look exactly like those proposed by the White House," the Freightos head of research added, noting that these would only go into effect in Q1 of next year at the earliest as even once the White House officially announces the new rule, the review process — which will likely include challenges, possibly in the courts — could take two to four months.
"This timeline would mean that e-commerce will still likely put significant pressure on air cargo capacity and rates this Q4 — and that pressure could even be intensified by shoppers increasing orders before the changes limit this e-commerce channel," Levine said.
"After that, though, changes to de minimis that approximate those proposed last week could dramatically reduce the number of cross-border e-commerce packages entering the US and have serious implications for air cargo volumes, capacity availability and rates," he added.