Industry News

Importers Must Plan for Possible East Coast and Gulf Coast Strikes

Jun. 10, 2024
By: Chaney A. Finn

The current Master Contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) which is an alliance of container carriers, direct employers, and port associations serving the East and Gulf Coasts of the U.S. is set to expire on September 30th of this year.

However, the negotiations have stalled, with the ILA having cancelled negotiations planned for June 11, 2024. The ILA claims that terminal operator, APM Terminals and ocean carrier, Maersk Lines are utilizing an Auto Gate system, which processes trucks without ILA labor at the Port of Mobile, Alabama, contrary to the current Master Contract. Such automation threatens to lower the number of ILA members employed at Mobile, as well as any other port that implements similar automation. The ILA is not expected to meet with USMX until the issue is resolved.

All East Coast and Gulf Coast cargo is moved by the ILA, which is the largest North American longshoreman union. The ILA represents more than 85,000 members and has persistently opposed automation efforts at various marine terminals in the past. The last time the ILA went on strike was in 1977 for 44 days. Stalling negotiations and a potential strike threaten to impact the processing of containers and other equipment at the ports, resulting in supply chain disruptions through delayed deliveries and increased freight rates from tightening capacity.

Importers and logistics companies anticipating the strike to materialize are already rerouting East and Gulf Coast shipments to West Coast ports ahead of the peak shipping season. This rerouting adds shipping constraints including longer lead times and increased ocean freight rates and accessorial fees associated with limited container capacity and congestion caused by the drought restrictions of the Panama Canal and avoidance of the Red Sea due to the attacks on commercial vessels. As we have previously reported, West Coast ports have encountered historic congestion, causing significant supply chain disruptions due to a variety of reasons, posing risks of repeated events with this increased volumes from EC and GC rerouting.

If you have any questions about your imports and import operations do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP.