Home » Dockworker Strike Looms, Threatening Global Shipping

Dockworker Strike Looms, Threatening Global Shipping

by | Sep 12, 2024 | Blog Post

With contract negotiations at a stalemate, the possibility of a U.S. East Coast dockworkers’ strike threatens to paralyze global container shipping, impacting millions of TEUs and leaving terminals idle. Details on this potential epic disruption were discussed with leading transatlantic carrier, Hapag-Lloyd, on a recent episode of the Dimerco-sponsored Freight Buyers’ Club podcast.

 

Global container shipping markets could face a significant shock, one that they are ill-prepared to handle, if dockworkers at U.S. ports go on strike next month, according to Torsten Hartmann, Senior Director Trade Management Transpacific at Hapag-Lloyd.

Here’s an excerpt from the show:

Negotiation Stalemate

Negotiations between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA), which represents over 14,000 dockworkers at U.S. Gulf and East Coast ports, have been ongoing since 2022. The current master contract expires on September 30, 2024, and ILA President Harold Daggett warned on September 4 that the union “will most definitely hit the streets on October 1 if we don’t get the kind of contract we deserve.”

Hapag-Lloyd’s Hartmann said a strike closing ILA-manned ports would have far-reaching, global consequences. “If we were to see a full-blown strike on the whole U.S. East Coast, this will be very significant in terms of impact to shipping,” Hartmann stated.

“I’ve been asked by the management in my company, ‘What’s your Plan B?’ The honest answer is there’s no way you could possibly circumvent a full-blown strike on the U.S. East Coast. The volume that is being moved there, you will not be able to work your way around that.”

Potential Scale of Disruption

Recent estimates from container shipping consultancy Sea-Intelligence highlight the potential scale of disruption. In a report last month, the firm estimated that U.S. East Coast ports handle around 2.3 million TEU (twenty-foot equivalent units) in October, averaging 74,000 TEU per day. Sea-Intelligence CEO Alan Murphy warned that even a one-week strike at the start of October could cause a backlog that would not be fully cleared until mid-November.

Hartmann echoed these concerns on the podcast, explaining that a common industry rule of thumb is that each day of a strike typically results in a week of disruption to clear the resulting backlog. “In the meantime, ships would be stuck, cargo would pile up, and terminals would be unable to operate,” he added. “A full-blown strike would indeed be a very significant event.”

To hear more details check out the full Freight Buyers’ Club Episode.

 

Alternative Shipping Solutions

If there is no resolution, Dimerco expects more ocean freight to switch to air freight starting in September. especially gateway JFK. But according to Dimerco’s VP of Global Sales and Marketing, Kathy Liu, current freight capacity at JFK is inadequate for the potential demand. 

“There are only nine flights into JFK from Shanghai, which definitely can’t digest that much cargo demand in the market,” says Liu. 

One alternative is Air/Truck service from Shanghai (PVG) to Chicago (ORD) Gateway to cover East Coast Destinations. In fact, Dimerco has begun offering its own freighter charter service (B747-800F) from PVG to ORD on weekly basis (Thursdays), which will continue through December 5. 

The main advantages of shipping in this lane via Dimerco, according to Liu, are: 

  • PVG to ORD has at least 30 flights per week in the market 
  • Dimerco has block service agreements (BSAs) with Korean Air Lines and Eva Air for weekly service to ORD 
  • Dimerco has its own CFS at ORD to break down ULDs and shorten lead times, and has established partnerships with trucking companies that service ORD-to-East Coast lanes.  

Says Liu, “Transit time from PVG Airport to East Coast destinations is 5 to 7 days, which can meet the service requirements of customers, especially those switching from ocean to air.”  

Do you need help solving for the potential dockworker’s strike on the U.S. East Coast? Reach out to Dimerco for solutions and expert guidance.