Emergency Strike Threatens US Seaborne Trade, Container Carriers Advise Alternative Routes
In order to circumvent the disruption predicted by an impending dockworker strike set to begin on Tuesday, the world’s largest container carrier is urging customers to divert US cargo to East and Gulf Coast ports. MSC Mediterranean Shipping Co. SA issued a customer alert, stating that ongoing negotiations between the longshoremen’s union and port employers might not reach a resolution by the September 30 deadline. As a result, terminal closures are expected to begin on October 1, leading to delays in container movement across various ports in the United States.
Possible Impacts on Cargo Movement and Freight Rates
If the strike proceeds as planned, up to 50% of the nation’s seaborne trade could be disrupted, causing significant delays in both imports and exports. Terminal closures at ports from Boston to Houston are anticipated, leading to congestion and backlogged shipments.
As a contingency, MSC has advised customers to consider adjustments in bookings, such as rolling shipments to other vessels or canceling them altogether. While the company will continue accepting requests for dry cargo services, reservations for refrigerated cargo may not be guaranteed.
Hapag-Lloyd AG, the world’s fifth-largest container carrier, has also warned of potential disruptions to bulk and breakbulk cargo. Additionally, companies in the industry, including Hapag-Lloyd, have suggested that industrial action will likely drive up freight rates.
Challenges and Potential Implications
The influx of diverted shipments to alternative routes is expected to overwhelm the system, making it an intricate challenge for importers to find alternative ways to transport their goods. CH Robinson Worldwide Inc., one of the largest US freight brokerages, cautioned that if the strike begins on October 1, alternative routes could rapidly reach their maximum capacity, resulting in further complications for shippers.
According to estimates by Oxford Economics, a strike could cost the US economy between $4.5 billion and $7.5 billion per week. Even once the strike is over, clearing the resulting cargo backlog could take approximately one month for each week of delay. This poses a significant risk to retailers, manufacturers, and other importers who rely on timely shipments and ample inventories ahead of the crucial fourth quarter.
Moreover, West Coast ports, which currently operate at full capacity, offer limited relief as potential alternative gateways for goods. Thus, a quick resolution to the impending strike and a return to normal operations are of utmost importance.
The container carriers’ advisory and the potential consequences of a prolonged strike emphasize the need for proactive measures and alternative routes to mitigate the disruption to US seaborne trade.
