The global shipping industry is bracing for significant disruptions as a potential strike threatens to shut down operations at 36 major US East Coast and Gulf ports. These ports handle between 40-50% of the nation’s imports and exports, and the strike, slated to begin on 1 October, could cause widespread challenges for stakeholders worldwide.
Impact on Global Shipping and Retail Operations
Han Deng, a transportation partner at Reed Smith law firm, emphasized the looming risks for shippers of US-bound goods. If the strike proceeds, freight costs are expected to surge, and retailers may face difficulties meeting consumer demand during the critical winter holiday season in the US.
The precedent for such disruption is concerning. A one-day shutdown of West Coast ports in 2023 led to delays that persisted for three weeks, with dwell times increasing by up to 148%, according to data from supply chain platform Project44. A prolonged East Coast strike is anticipated to be even more disruptive, with Project44 estimating that recovery could take 4-6 weeks for every week of port closures. Similarly, Danish firm Sea Intelligence predicts that even a one-day strike by the International Longshoremen’s Association (ILA) would take five days to clear.
Deng warns that the impact could extend long after the strike is resolved, as supply chain recovery might take weeks or months, exacerbated by high inflation, geopolitical uncertainty, and existing regional conflicts.
Peak Shipping Season Jeopardized
With peak shipping season already in full swing, diverting cargo to alternative West Coast ports is no longer a viable solution. Project44 analysts fear that the strike could endanger holiday inventory, with potential shortages and price hikes becoming more likely.
The port of New York and New Jersey, a key player in the US supply chain, stands to be one of the most affected by the potential strike. The nonprofit research group Mitre estimates that the port could lose around $640 million in revenue for each day of inactivity. The port authority, aware of the looming crisis, has taken proactive measures to boost operations, encouraging shippers to expedite deliveries and coordinating with partners to mitigate disruptions.
Annually, approximately $240 billion in goods move through the port of New York and New Jersey, making it a critical hub in the nation’s supply chain infrastructure.
Historical Parallels and Lessons Learned
The shipping industry has experienced significant disruptions in recent years, from the COVID-19 pandemic to the March 2024 Baltimore Bridge collapse. Han Deng points out that the potential strike could lead to similar backlogs, delayed schedules, and rerouted shipping operations. These past events serve as stark reminders of the vulnerability of global supply chains to sudden disruptions.
As the 1 October deadline approaches, shippers, retailers, and port authorities are scrambling to prepare, but the extent of the strike’s impact remains to be seen. With billions of dollars at stake and the global supply chain hanging in the balance, the shipping industry is on edge.
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Source: Container News
