The strike in the eastern United States is imminent! Action is coming on October 1st

The East Coast Dockers Union speaks out strongly!

To win a fair contract, ILA rank-and-file workers are preparing to take the final action; they will strike on October 1 to fight for the wages and benefits they deserve. NORTH BERGEN, N.J.—(September 17, 2024) Tens of thousands of International Longshoremen’s Association (ILA) longshore workers, from ports from Maine to Texas, are united in their determination to win a new contract with their employer, the United States Maritime Union (USMX). With two weeks to go, workers are preparing to strike to demand wages commensurate with the billions of dollars in profits earned by shipping companies.

"USMX claims to offer industry-leading wages, but their definition of 'industry-leading wages' is completely different from ours," the ILA wrote in a letter to members earlier this week. "Inflation has completely eroded any pay increases, and the skyrocketing cost of living has made the current situation look very different from what it was six years ago. Our members are facing tremendous financial pressures, struggling to pay rent, mortgages, car loans, daily expenses, utility bills, taxes, and even their children's education. USMX's employers are greedy to an unprecedented level - their profit levels are at an all-time high. Yet, they are squeezing junior employees by paying low wages and implementing a three-year tiered promotion system. In the face of this unfair treatment, if USMX refuses to adjust its position, workers will have to take action to demand the rights and respect they deserve. We are the foundation of this industry - without our labor, the ships will not operate."

“The only thing we can guarantee to our workers is an hourly, daily or shift wage. Our rank and file members do not have a fixed wage – they work when the ships are docked and have the opportunity to earn only when their seniority allows them to.” ILA’s rank and file members will no longer accept clauses in their master contracts that include wage increases of less than a dollar per hour or year, while employers sometimes do not even require any wage increases during the life of the contract. “Over the past three decades, ILA workers have received an average annual wage increase of only 2.02%,” the ILA said. “Many years this percentage was zero, including the period from 1993 to 1996 when ILA longshore workers did not receive any wage increases. This treatment is unacceptable to the ILA deepwater longshore workforce in negotiations, especially until 2024.”

“With the unwavering solidarity of the International Longshoremen’s Association (ILA) membership and the strong support of the International Longshoremen’s Union, President Harold Daggett expressed his confidence in the USMX’s actions. He believes that by working together, ILA members can reach a landmark agreement. This means that strike action must be launched along the entire coastline starting October 1, and the ILA is ready to meet this challenge to ensure that workers get the rights and improved working conditions they deserve.”

PART 02

The strike in the eastern United States will affect more than half of the United States’ imports!

In addition to the salary issue, port automation is also one of the important reasons for the deadlock in the negotiations between ILA and USMX. ILA Executive Vice President Dennis Daggett firmly stated his position on automation: he supports technologies that can improve human work efficiency, but firmly opposes replacing human labor with robots. He vowed to fight the trend of automation and firmly believed that ILA will not only win this dispute, but will also lead the victory in protecting workers' rights around the world.

However, Lars Jensen, CEO of Vespucci Maritime, sounded a note of caution, noting that the ILA’s hardline resistance to automation could raise the cost of U.S. imports, weaken the competitiveness of U.S. exporters in international markets, and hinder overall operational efficiency gains. Jensen stressed that efficient ports are crucial for shipping companies because they can provide shorter vessel dwell times and higher operational efficiency, which is particularly critical to maintaining and enhancing the competitiveness of international shipping operations.

Meanwhile, Frank Kenney, director of industry solutions at system integrator Cleo, predicts that if a strike does occur, cargo volumes at the Port of Halifax and the Port of Montreal in Canada are expected to grow significantly, mainly due to the convenient rail network connections near the two ports, making them ideal alternatives. However, Kenney also pointed out the challenges that may be encountered during cargo transshipment, especially the logistics difficulties through the Midwestern rail system in the United States, especially the bottleneck problems at the key hub of Chicago, which may lead to longer transportation times and increased costs.

It is predicted that the strike will affect more than 50% of containerized cargo imports into the United States, posing a major challenge to the global supply chain. Analysis by HSBC shows that approximately 15% of the global container fleet will also be affected. In the face of this potential impact, the National Retail Federation (NRF) has taken precautionary measures and raised its forecast for container imports in September, with the aim of mitigating supply disruptions that may be caused by the strike by increasing cargo loadings in advance. However, this strategy has also led to a peak in shipments from Asia, which is expected to decline significantly in the coming months, and spot prices on the market may face further pressure unless the strike situation unexpectedly improves.

PART 03

The strike will have a ripple effect on the global supply chain!

The negotiation deadlock between the ILA and USMX not only threatens the normal operation of U.S. ports, but may also have a chain reaction on the global supply chain.

Shipping analysis agency Linerlytica pointed out that the 14 ports controlled by ILA handled 28.4 million TEUs of containerized cargo in 2023, with a weekly throughput of nearly 550,000 TEUs. Every week the strike is extended will cause about 1.7% of the global container fleet to be shut down.

HSBC warned that the strike could cause container freight rates to rise in the fourth quarter, and its impact could last until the end of January of the following year, before the Chinese New Year, thus exacerbating market volatility. In addition, shipping companies have begun to take a series of countermeasures. For example, Maersk Line has issued a warning of possible shipping bottlenecks and delays of up to 4 to 6 weeks. Some companies have even begun to transfer goods to West Coast ports to avoid potential risks.

However, turning to the West Coast is not entirely without problems. HSBC also pointed out that while this strategy can alleviate import pressure from Asia to a certain extent, it may also put additional burdens on West Coast ports and their land cargo evacuation systems. At the same time, imports from Europe and Latin America may face delays due to limited handling capacity at ports along the Atlantic coast of Canada and Mexican ports, further exacerbating supply chain tensions.

What is even more worrying is that the strike at East Coast ports may become another major challenge to the global container fleet capacity. With the global fleet already under tremendous pressure due to multiple factors such as the situation in the Red Sea, this strike may re-trigger the problem of tight container ship capacity and container shortages, which will lead to a sharp increase in freight rates. According to Alphaliner data, the total capacity of ships serving the East Coast and Gulf Coast port routes is about 4.6 million TEUs, accounting for 15% of the total global fleet capacity. If these ships are forced to suspend operations during the strike, it will have a far-reaching impact on global trade, not only limited to the United States, but also affecting other countries and regions that rely on these routes for the import and export of goods.

All in all, potential strikes at U.S. East Coast ports not only threaten more than half of U.S. container imports, but could also trigger a chain reaction in the global shipping market, further exacerbating freight rate volatility and supply chain uncertainty.

-END-

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Source: Shipping Network, Zui Shipping

Source: Official media/online news