Negotiations for a new multi-year contract between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) began in mid-December 2023. The ILA represents 45,000 dockworkers at 36 U.S. East and Gulf Coast ports from Maine to Texas and the USMX represents marine terminal operators and shipping lines on both coasts.
The ILA seeks to reach a new collective bargaining agreement (CBA) for its covered port workers before the current six-year labor contract expires on September 30, 2024. Demanding improved compensation and the prohibition of fully automated terminals and equipment, the ILA wants the negotiated compensation rates available to ILA members exclusively. The unionized dockworkers are prepared to launch a simultaneous strike at all U.S. East and Gulf Coast ports from October 1 if a new labor agreement is not reached.
Potential shift to intermodal shipping
The U.S. East and Gulf Coast ports are critical transit points for a range of goods arriving from and departing to Europe and Latin America, including automotive components, pharmaceuticals, apparel, electronics, and industrial equipment. These ports also typically process inbound and outbound shipments to and from Asia through the Panama and Suez Canals, though both transit routes have been recently disrupted by climatic and geopolitical issues.
Given the recent issues through both Canals, many Asian carriers have resumed utilization of U.S. West Coast ports such as the ports of Los Angeles and Long Beach, California. Inbound container volumes at the top U.S. East and Gulf Coast ports declined by 13.4% year-on-year in September 2023, while the top U.S. West Coast ports recorded a 16.7% year-on-year increase during the same time.
The disruptions in the Red Sea leading to the Suez Canal have prompted a 173% surge in spot container shipping rates between the U.S., Asia, and Europe. The short-term rates for shipping cargo in a 40-foot container from Asian ports to the U.S. East Coast have increased 55% to $3,900 (€3,560). Many of the global container lines have implemented full transit suspensions through the region due to the deteriorating security situation and have instead opted for the long and expensive diversion around the Cape of Good Hope.
The impending labor movement and associated congestion at ports on the U.S. East and Gulf Coasts could further motivate carriers to ship only to U.S. West Coast ports, increasing their utilization of intermodal transport to reach the rest of the U.S. This would decrease carriers’ reliance on the Panama and Suez Canals on routes like Asia-U.S. East Coast and South America West Coast-U.S. East Coast.
Traffic not yet impacted
Impacts from the recently started negotiations between the ILA and the USMX have not yet translated into significant increases in congestion at U.S. ports. Congestion metrics for U.S. West Coast ports improved over the last three weeks of 2023 and into 2024 compared to the previous three-month average. The Port of Los Angeles-Long Beach is reporting average vessel counts of seven and average wait times of less than a day. Both marks are below the three-month average for the port.
Average wait times stand at 0 days at the Port of Seattle with average vessel counts for the port at three. Average wait times at the Port of Vancouver stand at 1.4 days, below the three-month average for the port. Average vessel counts stand at 16 but are still lower than the average for the previous quarter.
Combined average vessel counts and wait times for Gulf Coast ports also look encouraging into 2024. The Port of Houston is reporting average wait times of 1.3 days and average vessel counts of 17, both numbers are below the previous three-month average for the port. The Port of Mobile is experiencing average wait times of less than a day and average vessel counts of four. Both marks are below the previous three-month average.
East Coast ports show encouraging signs on the whole with the exception of the Port of New York-New Jersey. Average wait times and vessel counts at the Port of New York-New Jersey have increased compared to the previous three-month average, however, average wait times are still less than a day, and the average vessel count is seven. The Port of Savannah is reporting average wait times of 1.5 days and average vessel counts of 12. These marks are both below the three-month trend for the port.
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