A super storm sounded the alarm.
The International Longshore Association (ILA), the largest maritime workers' union in the United States, has threatened the United States Marine Federation (USMX) that tens of thousands of union members will go on strike if a new salary agreement cannot be reached before the contract expires on September 30th. According to the latest statement, there are still significant differences in negotiation intentions between the two sides, and the risk of a major strike continues to escalate.
Analysts warn that a strike could affect dozens of ports from Maine to Texas and could lead to severe disruptions in US freight. According to the latest report from Oxford Economics, the strike could involve up to 45000 port workers and affect approximately 60% of the total shipping volume in the United States.
According to Bloomberg citing experts' expectations, if the strike lasts for a week, it could cause up to $7.5 billion (approximately RMB 53 billion) in losses to the US economy.
Strike Storm
A potential supply chain crisis hurricane is gradually approaching ports along the East Coast and Gulf Coast of the United States.
Due to serious salary disputes, the International Longshore Workers' Association (ILA) has threatened the United States Marine Federation (USMX) that tens of thousands of union members will go on strike if a new salary agreement cannot be reached before the contract expires on September 30th.
When asked about the magnitude of the salary increase in an interview with CNBC, US Secretary of Transportation Pete Buttigieg said, "ILA requires a 77% salary increase in the new contract
At present, according to the statements issued by ILA and USMX respectively, there is still a significant difference in negotiation intentions between the two sides, and there is still a certain distance to reach a negotiation agreement. The risk of strikes is increasing.
On September 23rd local time, both sides made another public statement, claiming that the other party refused to negotiate.
Despite multiple attempts by USMX to engage with ILA and resume negotiations, we are still unable to schedule a meeting to continue negotiations on the new main contract, "said USMX
If an agreement is to be reached, both parties must sit down and negotiate. There is currently no indication that ILA is interested in negotiating. We hope to negotiate and avoid strikes, but if ILA is not willing to return to the negotiating table, time will be running out, "the agency added.
ILA attributed the current negotiation deadlock to USMX's refusal to provide acceptable wage increases to workers.
Given the numerous conflicts between the negotiating parties, the market believes that this major strike is inevitable. Meanwhile, major ocean shipping companies and port operators have begun issuing warnings to customers and developing emergency plans.
The New York Times reported that many companies are already preparing for a possible strike, with some accelerating cargo transportation and even transferring goods to West Coast ports. However, the capacity of West Coast ports is limited and cannot fully absorb the cargo flow of East Coast ports. The response measures of enterprises can only have a short-term alleviating effect.
The attitude of the Biden administration may also further worsen the situation. According to the Associated Press, some experts speculated that the Biden administration may invoke the Taft Hartley Act to limit the strike to a few days.
The Taft Hartley Act was a federal law enacted by the United States Congress in 1947 that restricted the activities and powers of unions. According to the bill, if it is determined that a port strike would endanger national public health and safety, the President may request the court to order an 80 day cooling off period, which will effectively suspend the strike.
But according to US government officials last week, Biden does not intend to invoke the bill to prevent port strikes - the underlying reason may be that he does not want to offend worker voters. Therefore, the Biden administration may not use the Taft Hartley Act before the election.
How significant is the impact?
Once the strike occurs, it will affect dozens of ports from Maine to Texas and may lead to severe disruptions in US freight transportation. According to the latest report from Oxford Economics, the strike could involve up to 45000 port workers and affect approximately 60% of the total shipping volume in the United States.
The East Coast ports handle 43% of imported goods from the United States, and any shutdown could lead to supply chain delays nationwide. The retail industry, food supply chain, and automotive industry, which rely on timely inventory management, are expected to be particularly severely impacted, potentially leading to empty shelves and rising prices.
Analysts say that if the strike really happens, it is expected to have an impact not only within the United States, but also on the global trading system. Global enterprises may need to reassess their supply chain strategies to address potential port closures and transportation delays.
Regarding the impact of the port strike on industries, Jason Miller, a professor of supply chain management at Michigan State University, pointed out that "in terms of exports, the most affected commodity is plastic resin, while in terms of imports, I believe the most affected industry is the automotive industry, especially considering that automotive parts are important imported products in the United States
So far this year, the East Coast of the United States alone has processed over 300000 TEUs and 17000 LCL of automotive parts and vehicles from original equipment manufacturers and first tier suppliers, "according to consulting firm CH Robinson. 50% -60% of the parts shipments came from Europe and India, while the rest came from the Asia Pacific region.
Miller pointed out that the shortage of automotive parts supply may put car manufacturers in swing states such as Michigan and Georgia in a difficult situation.
Miller also proposed another agricultural product that could be greatly affected by the strike - bananas. For consumers, the strike could have a huge impact on the price of bananas in the United States.
So far this year, we have imported over 2 million tons of bananas, of which 66% to 75% have entered through ports along the East Coast and Gulf Coast
He predicts that if the strike continues for several weeks, the number of bananas in the US consumer market may sharply decrease compared to normal times. Considering that bananas are not easy to store and are prone to spoilage, the shortage caused by strikes may further worsen.
Miller further stated that the actual impact of this port strike will depend on the duration of the potential impact. If the strike lasts only 24 to 48 hours, then in the long run, the destructive power will not be so great. If the strike lasts for a week or more, there will be a large-scale impact
Grace Zwemmer, Associate Economist for the United States at Oxford University, stated in a report that even a two-week strike could disrupt supply chains until 2025.
According to Bloomberg citing experts' expectations, if the strike lasts for a week, it could cause up to $7.5 billion in losses to the US economy.
The market is concerned that if a large number of dock workers launch a strike in early October, coinciding with the peak season of container shipping in the United States and a critical moment before the US election, the large-scale strike may have an impact on the domestic political situation and global trade security.