09/20/2024
Starting Monday
Everything depends on the ILA and labor issues. This will create massive congestion not only on the EC but also on the WC. WC is already congested and behind about one week since demand and the WC has spiked in August/September as importers try to avoid the EC and projected issues.
If the ILA does strike, then you can expect significant delays of multiple weeks on the EC and WC.
Depending on the carrier and timing, you can expect rate increases starting 10/1 or 10/15 to the tune of thousands of dollars. Again, similar to the Red Sea playbook, carriers use this disruption to stabilize and then increase their rates.
Depending on the length of the strike/slowdown, expect rates to stay higher if there is disruption and delay.
Some paraphrasing based on articles and commentary yesterday:
Reuters cites an unnamed US administration official that President Biden does not intend to invoke Taft-Hartley to stop a strike in the US East Coast ports saying, "We've never invoked Taft-Hartley to break a strike and are not considering doing so now".
The White House Press Secretary, yesterday, was specifically asked the question as to whether the President would invoke federal law to avoid or break a strike, their answer was: “I’m not going to get into hypotheticals. I’m not going to get hypotheticals from here.” - so the politicians will play both sides - a real surprise.
ILA and USMX continue to only talk through the press, which is not a good sign, though there is always the potential of back channels. Based on the videos uploaded and statements below, I'm not sure anyone moves backward easily from their current stance.
Yesterday, the USMX uploaded a message on their site that included the statement:” USMX is in strong agreement with the 177 trade associations who are calling for the immediate resumption of negotiations with the ILA [...] it is disappointing that we have reached this point where the ILA is unwilling to reopen dialogue unless all of its demands are met.”
And also yesterday, ILA uploaded statements that included the following: "Instead of negotiating in good faith and respecting the ILA workforce, USMX has chosen to engage in an ugly propaganda campaign designed to paint ILA longshore workers as “greedy” and to also mask their own ineptitude and failure in these negotiations [...]”
The slow-motion train wreck that is a strike on October 1st appears to continue moving forward and increasing in speed.
So what now? What is there to do?
Having been through a few of these and seen or attempted many different strategies in the past, the best answer is actually to stay the course of how your supply chain is established and not try and make huge shifts.
Attempts to circumvent by trying to move to Ensenada or Canada will likely result in little improvement or negative outcomes. Unless, you already have something established through those ports (Ensenada in particular)
There is a strong likelihood that the WC will also slow down even more than it is now - possibly due to some sympathies but as mentioned earlier, adjustments in volume have already been made to the WC by importers, and despite the best efforts and statements of carriers/terminals/railroads - the infrastructure is frankly not that different than it was last time we went through this
So, congestion everywhere, delays everywhere - particularly for inland via the EC (obviously), but WC is not the magic bullet that keeps everything on time at all.
Here is what we can do:
Stop your cargo on the coast as much as possible, preferably LA and Norfolk/Savannah on the EC. Cargo that is in your control gives you more options/flexibility and rail delays, which are already an issue without any of this will be in real trouble. If you have the cargo, then you can transload/truck etc.
Manage expectations and over-communicate
Prioritize and improvise - you can't win them all but you can have a shot to win the most important ones
We do realize that there is a lot of doom and gloom in one email so let us end on a good note - to which I can only offer philosophical cliches - but it does not make them less true or applicable!
Everyone is in the same boat and it is not some mistake, excuse, or unknown reason why there are delays
We will get through this together - ultimately the best way out is through and forward the only direction to move
Remember that how we work together will define the experience that we all have - we only have so much control over external things. What we can do is deal with whatever situation with urgency, courage, and a commitment to service.
