The US East and Gulf Coast dockworker strike, which began on the 1st October 2024, has been temporarily resolved after three days of disruption, but the risk of further strikes remains.
The strike, led by 45,000 members of the International Longshoremen’s Association (ILA), impacted 36 major ports, including New York, Savannah, and Houston, leaving 50 container ships anchored offshore.
The tentative agreement between the ILA and the United States Maritime Alliance (USMX) grants a 62% wage increase over six years and extends the current contract until 15th January 2025, allowing more time to negotiate unresolved issues such as port automation. However, concerns persist that if a final agreement is not reached by January, global supply chains could face severe disruption during a critical period.
The initial strike has left a significant backlog, with congestion at key ports expected to take weeks to clear. Shipping rates are already rising, particularly on Asia-US routes, and shippers should brace for longer delays and rising costs, worsened by post-strike congestion and the busy holiday season.
Immediate impact of the strike
The three-day strike caused major disruptions, with over 50 vessels stranded offshore, leading to capacity losses exceeding 400,000 TEU—around 1.4% of the global container shipping fleet. Ports like New York and Savannah were severely impacted, and shipping rates on Asia-US East Coast routes surged. While some cargo was rerouted to alternative ports in Canada and Mexico, these measures provided limited relief due to congestion at those facilities.
Many carriers declared force majeure, allowing them to alter or suspend their obligations due to uncontrollable events. For shippers, this resulted in rerouted goods, additional costs for retrieval, and potential storage at unexpected ports. The declaration of force majeure highlights the crucial need for comprehensive marine insurance to protect against unforeseen costs from delays, rerouting, and cargo abandonment.
Outlook for January 2025
If the ILA and USMX do not reach a final agreement by January, a resumption of the strike could disrupt global supply chains once again. With nearly 50 vessels affected in the initial strike, that number could escalate, potentially tying up 2.22 million TEU of cargo capacity if no resolution is found by the end of the month.
Freight rates are expected to rise sharply, with Asia-US East Coast rates possibly increasing by $2,500 per 40ft container in the first week alone, and by $1,400 per TEU for each additional week. These delays could lead to shortages in industries such as retail, automotive, and manufacturing, with shippers turning to alternative routes or air freight, which will further strain capacity.
We remain committed to keeping our customers informed and proactively managing logistics to navigate these challenges, ensuring continuity in your supply chains.