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A potential strike at the US Gulf & Eastern Coast ports is expected to commence on October 1st, 2024, posing significant risks to supply chain operations. This strike could cause major disruptions similar to those experienced during the recent rail strike in Canada on August 22nd, 2024, which led to over 20 changes in destination ports, as recorded by Shippeo. Although the Canadian strike lasted only 24 hours, the uncertainties and planning challenges began well in advance, affecting routing decisions and risk management across supply chains.
Looking ahead, the anticipated strike at the US Gulf & Eastern Coast ports could have even more severe implications.
September 30th, 2024: A Potential Disruption Looms Over US Gulf & Eastern Coast Ports
On September 30th, 2024, the current six-year contract between the International Longshoremen's Association (ILA), representing 25,000 dockworkers, and the United States Maritime Alliance (USMX), which negotiates on behalf of port, terminal, and shipping line management, is set to expire. The last major disruption involving the ILA occurred in 1977 and lasted 44 days. Today, a potential strike threatens more than 30 ports along the US East & Gulf Coasts, underscoring the vulnerability of supply chains and the importance of preparing for unexpected external events.
Context:
The ongoing labor dispute centers around wage demands, port automation, and retirement benefits, with negotiations stalling over the use of automated systems that reduce union labor involvement. A strike could severely disrupt the flow of goods, including essential items like manufactured products and chemicals, which primarily enter the US through Gulf & Eastern Coast ports. These ports currently handle over half (55.5%) of all US container imports, amplifying the potential impact on supply chain reliability.
Key Considerations for Risk Assessment:
-> Planning Challenges: For weeks, the threat of a strike and port swaps have already caused significant challenges in vessel operations and logistics planning. The risk of a strike can be enough to lose volume and berth at the targeted ports, further impacting the berth resources planning. So far, Shippeo has not yet recorded any blank sailing that can be attributed to the strike anticipation by the Carriers, but this is being continuously monitored for our customers’ containers.
-> Delays and Disruptions: East Coast ports in North America are currently grappling with severe service disruptions and delays, largely caused by the combination of vessels being diverted via the Cape of Good Hope route and the adverse winter weather conditions impacting South Africa's southern coast. While containers coming from Asian ports could potentially be rerouted through West Coast ports, doing so would create a considerable congestion risk. On the other hand, European and Latin American imports would also face significant challenges. Very few alternative options are available, and the strike seems inevitable.
-> Cost Increases: Port changes, accelerated voyages, and delays could lead to increased transportation costs. Cargo rerouting leads to additional costs such as longer distance driving, extra-capacity requirements leading to spot contracting, and an increase in demurrage and detention spending due to longer transportation arrangements. These additional costs may be subject to negotiation between shippers and receivers, with a best-case outcome being a 50/50 cost-sharing arrangement in case there has been a proactive risk management partnership culture settled between the respective logistics teams.
-> Importance of Communication and Coordination: Each routing change comes with an expected transport material lead-time on which the customer delivery windows are promised. In such situations, effective communication of the dynamic estimated time of arrivals (ETAs) at different transport milestones; from vessel departures to inland warehouse arrivals, and proactive and near real-time coordination among all stakeholders is crucial. Close collaboration between vessel operators, port authorities, carriers, and customers can help minimize disruptions and resolve issues quickly.
An easy-to-use toolbox, designed to enhance your customers' delivery experience worldwide
The global logistics teams in today’s world are working in a disruptive environment.
No visibility solution can fully predict the outcomes of risks and external events, especially as the industry undergoes a shift toward more data-driven approaches, led by the next generation of professionals. That’s where our platform, backed by a comprehensive suite of transport-specific APIs, steps in to provide robust support and proactive insights to help you navigate these uncertainties.
-> Enable proactive and transparent communication about the transport risks: We interconnect Shipper’s systems with the carriers’ systems and shows orders latest statuses on our interface to all parties. As an example, as part of a recent release, Shippeo’s risk management widgets now help to identify which external events (before and during execution) impact the movements of your transport orders regardless of the transport mode.
-> Reduce Demurrage & Detention fees: Shippeo provides a real-time D&D statuses of the containers, and with our workflows enables proactive transportation arrangements for the on-carriage legs. Once the container is released, our carrier network is enabled to track the last leg until the warehouse delivery in addition to the milestones provided by the ocean carriers.
-> Plan better with real visibility on the lead-times : To support the overseas planners, we also offer a comprehensive overview of the variability in container transit times for ocean carriers, emphasizing delays compared to the Shipper or Carrier planned arrival times. When the strike will hit, the delays will be significantly difficult to assess but the real-time data about the congestion statuses, and the ETA of the inventory in transit will empower your planners to make well-informed decisions.
In today’s digital supply chain era, the operational teams can do much more than just react to disruptions. Their expertise, know-how, and experience are key to anticipating the real risks. However, for an organization, it’s equally important to manage the costs of risk management. At this point, the data of high quality; such as having a reliable ETA for any shipment on the globe, is one of the secret sauces in creating resilient and anti-fragile supply chains to secure the business continuity with your customers.
Exploring Alternative Transshipment Options
Shippeo’s Port Congestion Tool can provide highlights about the berth activities at the alternative ports that can offer transshipment solutions in case of a major disruption in the Gulf & Eastern Coast ports.
Wish to explore how to overcome operational disruptions like these? Book a demo
Caribbean transshipments
Kingston
● 25% of vessels have a dwell time below 0.9 day(s) at berth
● 75% of vessels have a dwell time below 1.7 day(s) at berth
This duration varies between 0.3 day(s) and 3.2 day(s) at berth
Caucedo
● 25% of vessels have a dwell time below 1.0 day(s) at berth
● 75% of vessels have a dwell time below 1.9 day(s) at berth
This duration varies between 0.5 day(s) and 5.5 day(s) berth
Bahamas Freeport
● 25% of vessels have a dwell time below 1.5 day(s) at berth
● 75% of vessels have a dwell time below 3.2 day(s) at berth
This duration varies between 0.5 day(s) and 21.7 day(s) at berth
Canadian gateways
Halifax
● 25% of vessels have a dwell time below 0.6 day(s) at berth
● 75% of vessels have a dwell time below 1.0 day(s) at berth
This duration varies between 0.3 day(s) and 8.9 day(s) at berth
Vessel Count at Berth
Montreal
● 25% of vessels have a dwell time below 1.4 day(s) at berth
● 75% of vessels have a dwell time below 2.9 day(s) at berth
This duration varies between 0.0 day(s) and 10.4 day(s) at berth
St John
● 25% of vessels have a dwell time below 1.1 day(s) at berth
● 75% of vessels have a dwell time below 1.5 day(s) at berth
This duration varies between 1.0 day(s) and 1.7 day(s) at berth
