Xeneta: Shippers are not out of the woods
NewsWhile the strike on the US East and Gulf Coast has ended, Xeneta’s Peter Sand warns that “it is only a tentative agreement, and automation at ports will remain a major stumbling block.”
Contingency plans, new surcharges emerging ahead of expected strikes in US
With a potential strike by the International Longshoremen’s Association (ILA) approaching, industry stakeholders are implementing contingency plans.
As the potential strike by the International Longshoremen’s Association (ILA) looms over US East Coast and Gulf ports, industry stakeholders are starting to roll out contingency plans. Although there is still time for negotiations to be resumed between ILA and the United States Maritime Alliance, Ltd. (USMX), the union is standing its ground on plans to strike on October 1 if their demands are not met.
Hapag-Lloyd has announced that it will continue to accept export bookings to the US East Coast and Gulf ports as long as rail providers and terminals are accepting containers. For import customers, the company advises expediting import documentation and customs clearance to ensure swift cargo retrieval before any potential work stoppage. The German liner has also introduced a Work Disruption Surcharge (WDS) of US$ 1,000 per TEU, effective from 18 October 2024, on imports into US East and Gulf Coast ports from several regions, including Europe, Africa, the Middle East, Oceania, the Indian Subcontinent and Latin America. In addition, Hapag-Lloyd announced a General Rate Increase (GRI) of US$ 1,000 per container for cargo originating from the Indian Subcontinent and Middle East to the US East and Gulf Coast, starting on 17 October 2024.
CMA CGM has also announced new Local Port Charges for US East Coast and Gulf ports, effective from 11 October 2024, with rates ranging from US$ 800 to US$ 1,500 per container depending on cargo type.
Meanwhile, Port Houston issued a terminal update addressing the potential work stoppage. The port confirmed that container terminals will accept export cargo through 30 September, with vessel and gate operations planned until 7 pm.
“If a window is set to open on Monday, September 30th the cargo will be allowed to ingate until the gate closes at 6 pm. Receiving windows for vessels working after September 30th will be impacted, please be sure to monitor the vessel schedules/ERD/Cutoffs,” the port said.
Importers are urged to pick up cargo before the strike deadline, as any goods remaining in the yard after 7 pm on 30 September will be inaccessible until operations resume. The port is evaluating the possibility of extending gate hours if needed and plans to offer a Saturday gate on 28 September.
“In the event of a work stoppage, we will consider extended gate hours once operations resume to ensure a quick and smooth recovery for everyone. Leading up to September 30th, we expect normal business operations,” the port added.
Industry groups across the supply chain have urged the Biden administration in a joint letter to intervene in stalled negotiations to avoid the strike, however, the administration doesn’t seem to be planning to intervene.
Read more: Biden administration won’t intervene as imminent East Coast strike looms
Strike impact
With just 11 days left until the contract deadline, the risk of a strike is growing. Shippers are advised to have contingency plans in place to avoid disruptions to their cargo, especially those with goods on vessels already en route to US ports. Lars Jensen, CEO of Vespucci Maritime, believes the situation is likely to create fierce competition for trucking and chassis resources, as companies aim to move their cargo before the deadline.
“One day is too long of a shutdown,” said George Goldman, president and CEO of the North America division at CMA CGM during Port of Los Angeles’ September briefing. “The reality is that we’re in a fluid supply chain process. The moment you close the door, things begin to back up. We are not, in any way, looking forward to having any shutdown on any coast.”
According to Goldman, the customers will be the ones driving the potential switch from the US East Coast to West Coast services from the origin port, highlighting that the cargo will not be diverted by shipping lines directly.
Mike DeAngelis, Head of International Solutions, FourKites, said that automotive and agricultural exporters might find themselves in a particularly tight spot.
“We could see a significant drop in US agricultural exports, potentially leading to increased food prices in countries that rely heavily on American produce. For the auto industry, this could exacerbate ongoing supply chain issues, potentially leading to production slowdowns or even temporary plant closures. A strike could also lead to inventory shortages, potentially impacting holiday shopping seasons and year-end manufacturing targets,” he explained.
“While West Coast and Canadian ports would see a surge in traffic, they cannot absorb all the volume from the East and Gulf Coast ports. And the influx of freight could cause weeks, if not months-long backlogs, even after the strikes end. This could reshape shipping patterns well into 2025.”
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