As the countdown to the East Coast docker strike in United States has begun, Maersk, Hapag-Lloyd, CMA CGM and other shipping companies have issued the latest warnings and announced that they will impose various port interruption surcharges.
The International Longshoreworkers Association (ILA), which represents dockworkers in the eastern part of the United States, said it plans to strike on Tuesday (October 1), United States time, unless port operators agree to significantly raise wages and limit automation.
Roger, who has been engaged in U.S. line transportation in California for many years, told the first financial reporter that unless there is a "miracle" in the past few days, the U.S. East port strike will indeed happen.
Roger explained that the so-called East Coast actually stands for "East Coast and the Gulf of Mexico", that is, from the northernmost Boston to the southernmost Houston terminal, which handles about 500,000 20-foot containers (TEUs) per week, the impact of the strike is indeed significant.
He explained to reporters that the White House in United States is currently in a dilemma: "Don't let the strike offend the union, the strike offends the voters, and provides a pretext for the Republican Party to attack its own side." ”
An analysis by JPMorgan Chase estimates that the strike will result in the closure of United States' East Coast ports, which handle about half of United States' container imports every day, including food, medicine, consumer electronics and clothing, which would cost the United States economy $5 billion. United States businesses and officials are concerned that the shutdown could drive up prices ahead of the holiday shopping season.
The reason for this is that any port congestion has the potential to limit vessel supply, raise the prices shipowners charge customers, and ultimately drive up costs for United States consumers.
Regarding the price of the U.S. line, Roger told reporters that at present, because the strike looks very much like the real thing, basically there are very few goods in the U.S. East, and the price of the U.S. East (falling to) is the same as that of the U.S. West Line, and the U.S. East Line is higher than $2,000/40-inch container (FEU) under normal circumstances.
Maersk and other early warnings, businesses take precautions
Roger told reporters that the current preparatory measures at the East Terminal are almost the same, and in the past week, the gates have either opened early or closed late to facilitate customers to pick up their containers as soon as possible.
He said that some terminals will open their gates this Saturday to give import customers more time to pick up containers. If the strike does occur, the ship's operations will cease until the evening of September 30 at the latest. Demurrage and detention during the strike will cease to be calculated. The reefer at the dock will be left unattended and the dock will not be responsible for any damage to the cargo.
Previously, Maersk and other shipping companies have successively issued the latest warnings related to United States port strikes, announcing that they will impose port interruption surcharges.
In the case of Maersk, the company said that due to potential labor disruptions, Maersk will impose a local port disruption surcharge on all cargo entering and leaving terminals on the East Coast of United States and the Gulf of Mexico Coast, effective October 21, 2024, at a rate of $1,500/TEU.
It can be seen that other shipping companies have also introduced similar surcharges, and the amount of levy is similar. In this context, United States retailers, automakers and other businesses facing freight inflation have also begun to develop contingency plans for strikes that could close nearly three dozen ports next week.
Large retailers, for example, have imported many festive items in advance and booked space with ocean and rail carriers on the West Coast to avoid any disruptions. Brian Pacula, a supply chain expert at consultancy West Monroe, calculates that in the process, freight costs have risen by 20% due to the need for additional warehousing space to store expanded inventory.
Peter Sand, principal analyst at data provider Xeneta, said the cost of shipping from Asia to the West Coast of the United States has not risen recently, but that could change if the strike continues. At the same time, the United States strike threatens to delay outbound shipments and push up global shipping costs at a time when the Red Sea crisis has severely disrupted trade.
Mia Ginter, head of North American maritime trade at freight group CH Robinson, said that while trade can be done via longer shipping routes or air routes, some customers cannot afford these options and have to wait in line for their goods to be shipped to the East Coast.
At the same time, other points of entry into the United States "will not be able to handle large volumes of cargo." The entire supply chain will be overwhelmed," Ginter said, adding that "the longer the strike lasts, the more the costs will be passed on to consumers".
Chris Butler, chief executive of holiday decorations retailer National Tree Company, said 15% of the company's shipments would be "stuck" if the port closed next Tuesday, estimating that for every day of downtime, his shipments would be delayed for another five days.
Alex Naumov, chief operating officer of luxury car exporter West Coast Shipping, is advising his customers to transport cars through the Port of Oakland, California, as business on the East Coast has begun to slow down in preparation for a strike.
In recent months, the ports of the western part of the United States have been busy. The Port of Long Beach, California, for example, recorded its busiest month in nearly 113 years in August and saw throughput increase of nearly 34% year-over-year, driven by a 40% surge in imports.
Roger explained that shipping companies have announced notices to stop export bookings since last week, especially export cabinets from inland railways in the United States, which have basically stopped.
He said that he has not seen or heard about the re-docking port of ships going to the eastern part of the United States, and it is estimated that there will be no reaction until the strike occurs. There are not many plans left for shipowners, and whether to change the port depends on the judgment of the length of the strike. If it's over in a few days, there's no need to change ports. If they choose to wait at anchorage, once the terminal is reopened, it is expected that the port authorities will arrange the order of unloading in accordance with the handling of the 2021-2022 Dacong incident.
"The general consensus in the industry is that the impact of a strike for one week will take four to six weeks to recover, and if it unfortunately lasts for two weeks or more, the negative impact will continue into next year." ”
"Past experience has taught us that a lot of the impact will only be felt after a few months, such as empty containers on the east coast not being able to get back to Asia in time." He said, "The Spring Festival in 2025 is the end of January, and the pre-holiday rush will begin in December. Will the large-scale conversion of ships to the West of the United States significantly increase the freight rates of the West of the United States? These are unknowns. ”
The White House is tangled
At the moment, a White House spokesman stated that Biden administration officials have been liaising with all parties to encourage them to "negotiate in good faith."
The White House also reiterated that the Biden administration is not considering invoking the Taft-Hartley Act to force dockworkers to return to work, adding that the nation's supply chain is more resilient today than it was during the pandemic.
In simple terms, the bill gives the United States president the right to intervene in labor disputes that threaten national security or security, provides for an 80-day cooling-off period, and can force employees to return to work while negotiations continue. Prior to this, the Bush administration invoked this bill in 2002 to demand that labor and management reopen ports in the western United States.
Roger told the first financial reporter that the last time the bill was launched was indeed more than 20 years ago, but it was only launched when there had been a strike for more than 40 days, and it was even more impossible to press the pause button from the beginning this time.
Seth Harris, Biden's former senior labor policy adviser and now a senior fellow at the Burns Center for Social Change at Northeastern University in United States, said: "If the strike continues, I think it will have political repercussions." ”
Harris said she thinks Republicans will try to make a profit, and they will try to blame President Biden and say "he should fix this" or "he should go and apply for a ban."
According to reports, the International Longshoreworkers' Union, which represents 36 port workers, has two demands, one of which is a complete ban on the automation of machinery and equipment used for loading and unloading at 36 United States ports. Second, it calls for a significant increase in workers' wages, i.e., a 77% increase in wages under six-year labor contracts.
According to sources, the employers' association has offered a 40% increase in wages to dockers, but it has been rejected by the International Union of Dockers. The International Longshoremen's Association also reiterated that the union dockers were prepared to strike on 1 October, when the current main contract expired.
(This article is from Yicai)