?? What Does the Port Strike Mean for Freight?
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Good morning. The ILA Strike is on and folks have got a lot to say about it. We're detailing the potential impact on trucking and the wider supply chain. You can win $1000 if you correctly guess how long the port strike will last. More details in the feature story.
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What Does the Port Strike Mean for Freight?
The International Longshoremen's Association (ILA) strike of 45,000?workers officially started at midnight on October 1, 2024, affecting 36 major ports across the Gulf and East Coast.
The dispute focuses on wages, working conditions, and automation fears.
What ILA Demands:
The United States Maritime Alliance (USMX) had proposed wage increases and technological upgrades, but talks broke down over disagreements regarding automation's impact on jobs.
Impact on Trucking
The strike could have significant negatory effects on the truckload freight market, though experts argue that the demand may not decrease drastically.
However, disruptions to port flows will lead to longer hauls, increased empty miles, and potential rerouting through Canadian or Mexican ports.
Brad Forestor of JBF Consulting predicts that:
In-transit shipments will need to be diverted to alternative ports, such as Vancouver, Prince Rupert, or Halifax in Canada, or Lazaro Cardenas in Mexico. From there, they can be transloaded onto rail for further transportation and, where the rail network cannot support this incremental volume or the transit time needs, truckload will also see these increased long-haul moves. All of this will manifest as a temporary “demand increase” for truckload, which should easily be absorbed and welcomed by the current truckload market.
Supply Chain Effects
Essential products like bananas, automotive parts, and building materials face delays. Just-in-time manufacturing may see severe disruptions if the strike persists beyond two weeks. Some companies have already shifted shipments to West Coast ports.
Jason Miller, Supply Chain Professor at Michigan State University, writes:
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If the port strike sees a quick resolution (e.g., less than a week), disruptions will be relatively limited. In contrast, if the strike exceeds two weeks, we will begin seeing more systematic knock-on effects.
Jason Miller noted that the East and Gulf Coast port strike will mainly impact imports from Europe and the Americas, while goods from Asia are less affected. A strike lasting over two weeks could cause significant disruptions.
TIA President Anne Reinke echoed these concerns in a statement:
With the longshoremen’s strike now in effect, the disruption to our supply chain is both immediate and far-reaching, impacting industries from retail to manufacturing at a crucial time—just as the holiday season begins. As industry experts have noted, for every day of the strike, it will take five to seven days to recover.
White House Response
President Joe Biden has urged the ILA and USMX to resolve swiftly to avoid exacerbating supply chain disruptions during the critical holiday season.
The Teamsters, showing solidarity with the ILA, addressed Biden in a press release where they told him to "stay the f**k out of this fight."
Commentary & Perspectives
The current port strike has drawn reactions from various experts across the industry. For instance, Craig Fuller, CEO of FreightWaves, emphasized the impact of global shipping consolidation, stating:
"If you want to blame anyone – it’s the Box Club and the massive consolidation of global container shipping companies – a cartel... The top 10 container ship lines have 90% market share. Not a single one based in the US..."
David Spencer, VP of Market Intelligence at Arrive Logistics, warns that this disruption could be one of the most consequential freight market events since COVID-19. Others believe retailers have contingency plans in place, reducing immediate disruptions.
How Long Will It Last? Win $1000 If You Guess Correctly.
Got a good prediction of how many days the strike will go on? Throw in your guess under Kevin Nolan's post here.
There is a lot of uncertainty surrounding the length of the strike, with ILA union leader Harold Daggett saying he's in for the long-haul, saying:
"These people today don’t know what a strike is. I’ll cripple you. I will cripple you."
As the strike continues, its effects on the trucking and broader logistics industry will likely intensify, especially if negotiations remain stalled for an extended period. For now, companies are making contingency plans, and all eyes are on the negotiators and the government to see how quickly a resolution can be reached.
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5 个月Great article! Craig Fuller's comment may have been my favorite!