The Journal of Commerce reported that negotiations for a new International Longshoremen’s Association (ILA) contract covering dockworkers at East and Gulf Coast ports broke down suddenly this afternoon. The current master contract expires on September 30.
The breakdown in contract talks may result in work slowdowns and service disruptions as we approach the September 30 expiration date. The ILA President warned that a strike is likely when the contract expires. Consequently we expect shippers and importers will begin implementing contingency plans that include diverting cargo to West Coast, Mexican and Canadian ports; routing more cargo via airfreight and sea-air; and fast-tracking outstanding purchase orders.
While it is important to immediately consider these options, we want our clients make informed decisions. Each of these alternatives carries with it a number of collateral concerns:
First, we are in the traditional peak shipping season. Diverting cargo to West Coast, Mexican and Canadian ports will place additional pressure on already strained capacity and aggravate existing equipment shortages.
- MIQ’s experience during the 2002 West Coast strike indicates that shippers and importers can expect protracted delivery delays when diverting cargo to ports without the capacity to accommodate a surge of re-routed cargo or the transportation infrastructure to move the containers off the piers and on to the delivery destination.
Second, shippers and importers switching to airfreight can expect not only transit times equal or greater than normal port to port ocean freight transits, but also can anticipate substantial premiums for the privilege.
- The supply and demand arithmetic is straightforward. A single 747-400 has the capacity to carry the equivalent of 5.5 FEU. A single Post Panamax Plus vessel carries approximately 4,000 FEU.
The effect of a strike during a presidential campaign, in which a weak economic recovery is the central issue, adds complexity. In the event of a strike, the President can seek a court order invoking the Taft-Hartley Act emergency provisions to impose up to an 80 day cooling off period. An 80 day injunction would push the dispute past both the Nov. 6 election and the Christmas buying season.
- President Bush invoked the Taft-Hartley Act to suspend the 11-day shutdown of 29 West Coast ports in October 2002 in part because the strike undermined a sputtering economic recovery. Invoking Taft-Hartley is a tactic rarely employed. Mr. Bush was the first president to successfully invoke the Taft-Hartley Act since President Richard M. Nixon sought to stop a longshoremen’s strike in 1971.
MIQ Logistics is prepared to assist in your contingency planning, should you wish toaccelerate your deliveries; divert shipments to West Coast, Mexican or Canadian ports; switch to airfreight; or, simply stay the course.
For additional information, please contact your local MIQ Logistics representative.