Possible Port Strikes on East Coast to Increase Volumes Significantly at West Coast Ports

The potential for ILA strikes at U.S. East Coast ports could challenge that region if a deal is not reached this year.

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This month, ITS Logistics’ U.S. Port/Rail Ramp Freight Index reveals that all markets have stabilized for ocean and rail container demand, yet supply chain professionals still need to be aware of significant volumes entering the West Coast via Seattle-Tacoma (SEATAC) and Los Angeles and Long Beach (LA/LB) and for inland point intermodal (IPI) legs to be canceled.

“Port and rail operations have normalized, and volumes have reduced due to extended dwell times for containers in Asia awaiting export,” says Paul Brashier, VP of global supply chain for ITS Logistics. “Despite this positive news, we are keeping a close eye on the current conditions, which could quickly change in the coming months due to the potential for International Longshoreman Association (ILA) strikes at U.S. East Coast ports. The potential impact of these strikes on the US West Coast ports is a matter of concern. It's crucial for supply chain professionals to monitor this situation closely and be prepared for any potential disruptions.”

Key takeaways:

  • This month, the International Longshoremen's Association (ILA), representing 85,000 port workers along the eastern seaboard and Gulf Coast ports, requested substantial wage increases for its members. The union, citing the high profits of container lines, suspended contract negotiations with the U.S. Maritime Alliance (USMX), which represents employers at East and Gulf Coast ports. The dispute centers around the automation of port operations, with ILA leadership setting a stern boundary with respect to remuneration in the new labor agreement due to begin on Oct. 1.
  • According to reports, the ILA is vying for wage increases in excess of the 32% rise the International Longshore and Warehouse Union (ILWU) obtained for its members at West Coast ports last year. This occurred during its six-year agreement with waterfront employers, and last summer, the ILA indicated that a 40% increase in both wages and benefits was secured by its Great Lakes district.
  • Due to current freight being behind schedule, it will drive through the quickest ingestion point in the supply chain. Industry professionals are encouraged to monitor significant volumes entering the West Coast via SEATAC and LA/LB and the cancellation of IPI legs. These occurrences will increase transload and one-way trucking demand from those locations.

“The potential for ILA strikes at U.S. East Coast ports could challenge that region if a deal is not reached this year,” adds Brashier. “This will drive volumes to the U.S. West Coast as some shippers may hedge to avoid the U.S. East Coast. Dwell times at origin in Asia for export have also increased significantly. While this is muting inbound volume and leading to improved port operations, at some point, ocean carriers and non-vessel owning common carriers (NVOs) will increase capacity to capture surging trans-Pacific rates.”