The increasing likelihood of a labour strike at the ports on the US East and Gulf Coasts starting October 1 is anticipated to cause major disruptions to US supply chains, according to Flexport, and could potentially result in disruptions similar to those experienced during the COVID-19 pandemic.
The International Longshoremen's Association (ILA)'s master contract with the United States Maritime Alliance (USMX) is set to expire on September 30.
If they fail to finalize a new contract by then, the union intends to proceed with a work stoppage on October 1.
In its latest update, the full-service global freight forwarder and logistics platform warned of the possible impact of port strikes at the US East and Gulf Coast ports.
"An ILA work stoppage could upend US supply chains and even lead to pandemic-level bottlenecks," Flexport said.
"Beyond strained US West Coast ports (where many shipments will be rerouted), we could see chassis shortages, skyrocketing trucking and air freight rates, and a number of other dire outcomes," it added.
On the Trans-Pacific Eastbound (TPEB), from Asia to North America, Flexport said there are "no signs" of an uptick in volume for the pre-Golden Week rush as it approaches.
"In response to a potential ILA work stoppage, we're seeing some BCOs shift volume to the US West Coast (or via the US West Coast) as a contingency plan," it added, noting that a few carriers are looking at implementing East Coast/Gulf port surcharges for mid-October in the event of an ILA work stoppage.
"Should an ILA work stoppage occur, expect carrier-side surcharges, disruptions to operations, port congestion, and vessel deployment impacts for East Coast/Gulf Coast schedules and returns," Flexport added, noting that additionally, we may see potential equipment shortages at origin, depending on the duration of the potential work stoppage.
The full-service global freight forwarder and logistics platform added that floating rates have been extended until the end of September, with some fine-tuning and further mitigation.
Carriers may implement East Coast/Gulf surcharges in October, depending on the potential ILA work stoppage post-Golden Week.
For the Far East Westbound (FEWB) — the trade lane that moves goods from Asia to Europe — Flexpprt said demand is "trending downwards" and becoming.
It noted that volume for the last week of September might pick up a bit, but "we do not anticipate there to be any space issues."
For the Transatlantic Westbound route (TAWB), the analysis said that closer to September 30, when ILA's contract is set to expire, carriers have not announced a contingency plan.
"All carriers implemented increases in the first and second halves of September. They have announced similar increases for October," it added.
Additional costs for new US de-minimis rules
Meanwhile, Flexport said the US newly announced executive action that could deny de minimis treatment for all US imports covered by Section 301, 201, and 232 tariffs (including a wide range of products originating from China) could see businesses face additional duty costs and increased documentation requirements for de minimis shipments as soon as (or even before) Black Friday.
"In the short term, businesses may be required to start providing HTS classifications down to the 10-digit level for all products," it said.
Additionally, the report noted that the US Trade Representative (USTR) outlined final modifications to Section 301 tariffs imposed on certain products originating from China.
"Based on public comments on the agency's preliminary announcement on May 14, there will be additional §301 duties on several categories of goods," it said.