The International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) are set to resume negotiations on January 15, 2025. The previous negotiations led to a three-day strike in October, shutting down 14 ports along the East and Gulf Coast. This included three of the US’s busiest ports: Port of New York & New Jersey, Port of Houston, and Port of Savannah, Georgia.
Could Another Strike Happen?
The ILA and USMX were able to come to a temporary agreement that included an increase in pay for port workers, but they were unable to come to an agreement regarding the use of automation. Automation at the port would involve using automated cranes, gates, and container-moving trucks to load and unload freight. The ILA opposes automation due to its significant impact on job security. As technology increasingly replaces manual labor with automated systems, workers are concerned about the potential for widespread layoffs. The ILA advocates for a balanced approach that embraces technological advancements while safeguarding its members. On the other side, the USMX supports automation to enhance efficiency, reduce operational costs, and improve safety. By streamlining cargo handling processes, they aim to decrease human error and accelerate turnaround time at the ports. USMX seeks to ensure that US ports can handle an increase in cargo in a rapidly evolving global trade market. With the 100-day pause nearing its end, the critical question remains: Can the ILA and USMX reach a consensus?
If another strike occurs, there are two possible outcomes. The ILA and USMX could either come to an accord regarding automation, or the White House could invoke the Taft-Hartley Act to mandate the union members to return to work. This Act allows the President to request that the Attorney General seek a federal court injunction against a strike if it poses a threat to national health or safety. During the previous three-day strike, President Biden refrained from invoking the Act, instead supporting higher wages for workers. However, with wage negotiations already settled and a new president on the horizon, will the Taft-Hartley Act be invoked if automation remains the only issue? If not, could we see a strike lasting longer than three days?
How Can Shippers Prepare?
The January 15 deadline falls between the peak shipping season and the Lunar New Year, a period when shippers typically restock after the holidays and prepare for shutdowns associated with the Lunar New Year celebrations. A strike during this time could lead to significant backlogs of containers and vessels. While shippers may attempt to reroute freight to unaffected ports, this could result in increased transportation costs and longer delivery times. Extended delivery times might lead consumers to turn to local businesses or suppliers with shorter lead times. Retailers could face higher cancellation rates or complaints due to capacity constraints, potentially harming short-term profits and long-term brand reputation. Shippers may consider the following approaches to help mitigate these effects.
1.Push Safety Stock: Prepare for a possible outage by shipping freight earlier. This proactive approach could help alleviate the disruptions that could occur from a strike. However, the likelihood of many shippers opting for this approach could lead to a surge in early shipments, straining shipping capacity and driving up freight prices.
2. Budget for Air Transportation: Allow for some flexibility in your budget to accommodate air freight. Given the already tight capacity due to ongoing e-commerce demand, air freight costs are expected to remain elevated. Although air transit times will be shorter than ocean freight, delays may still occur. As the Lunar New Year approaches, these rates are likely to increase as shippers rush to ensure their "hot" freight arrives before shutdowns.
3. Utilize Parcel Services: Investigate parcel services and the discounts available that could benefit your operations. Many parcel companies offer a variety of services for import, export, and domestic shipping. The multi-weight service, particularly with a discount, could be a viable alternative to ocean transportation. Peak season will be in effect for parcel shipping, along with even higher demand due to the potential strike. This would be a good time to introduce a new discount or to increase current discounts.
Jena Cardenti is a Transportation Consultant at Körber Supply Chain, where she partners with clients to model transportation scenarios and analyze agreements. With a background in analytics, freight, and program management, she brings a proactive and customer-centric approach to managing transportation programs.
This article originally appeared in the November/December, 2024 issue of PARCEL.
