91 hours left to avert supply chain mayhem in the US
Source: Splash247
The countdown is on. As Daily Splash, our free newsletter, published today, there remained just 91 hours left to resolve a worker impasse in America that threatens to send supply chains around the world into chaos.
If by the end of Monday, no pay deal has been struck between employers and employees, 45,000 American dockworkers across the east and Gulf coasts will then down tools in an industrial action that will have ripple effects across every shipping sector.
Contract negotiations have broken down between the International Longshoremen’s Association (ILA) and port operators on the US east and Gulf coasts. The current agreement, which covers workers at facilities including six of the 10 busiest US ports, expires next Monday.
You feel the impact down the line months after
The United States Maritime Alliance (USMX), which represents shipping companies and terminal operators, on Thursday filed an unfair labour practice complaint against the International Longshoremen’s Association (ILA).
The complaint lodged with the National Labor Relations Board seeks to require “the union to resume bargaining — so that we can negotiate a deal,” USMX said.
White House officials on Thursday called for dockworkers and port operators to return to the bargaining table.
“Senior officials from the White House, Labor Department and Department of Transportation are in touch with the parties and delivering the message to them directly on being at the table and negotiating in good faith fairly and quickly,” a White House spokesperson told local media, adding that there was no talk of president Joe Biden using the Taft-Hartley Act to avert the strike.
The US Chamber of Commerce has urged Biden to step in to avert a looming port strike.
“We call upon the administration to immediately work with both parties to resume contract negotiations and ensure there is no disruption to port operations and cargo fluidity,” the chamber wrote in a letter to Biden on behalf of a raft of industry associations from meat to dairy, fresh produce and frozen foods.
A JPMorgan analysis projected that a strike could cost the US economy $5bn daily.
Adding to the impending potential chaos, dockworkers at eastern Canada’s largest port have also threatened to down tools.
Unionised dockworkers at the port of Montreal have voted to strike as their own pay negotiations drag on.
Global bank HSBC estimates a potential port strike across US east and Gulf coast ports would impact over half of US container imports and nearly a sixth of global container trade.
Alphaliner estimates that vessels with a total capacity of 4.6m teu, or 15% of the current fleet, are deployed on the routes serving east and Gulf coast ports and these could be out of rotation for a while.
HSBC has calculated that a week-long port strike will tie up 0.5m teu of overall container throughput on ships anchored during the strike, equating to 1.7% of fleet capacity.
Peter Sand, chief analyst at Xeneta, a box freight rate platform, commented: “There are ships on the ocean right now carrying billions of dollars of cargo heading to ports on the US east and Gulf Coast. These ships cannot turn back and they cannot realistically re-route to the US west coast. Some may divert to ports in Canada or even Mexico east coast, but the vast majority will simply wait outside affected ports until the workers return.
The consequences will be “severe”, Sand said, not only through congestion at US ports, but these ships will be delayed returning to Asia for the next voyage.
“A strike lasting just one week will impact schedules for ships leaving the Far East on voyages to the US in late December and throughout January,” Sand warned.
Data from eeSea, a Danish container shipping consultancy, shows seven vessels, primarily from THE Alliance, are now revealing omissions of one or more US east coast ports.
Looking beyond containers, Gulf coast ports, especially Houston and New Orleans, handle 60-70% of the US exports of crude oil, refined petroleum products, and natural gas, according to Project44, an American supply chain platform.
A significant portion of the petrochemical supply chain, including plastics and chemical feedstocks, also moves through these ports.
About 60% of US grain and soybean exports flow through Gulf Coast ports, with New Orleans being a major hub for agriculture exports from the Midwest.
Gulf coast ports handle around 25-30% of US exports of industrial machinery and heavy equipment, much of it bound for Latin America and Europe.
Approximately 30-35% of US automotive imports and exports pass through east coast ports, especially vehicles and parts from Europe.
Combined, the east and Gulf coast ports handle about 25-30% of US imports of steel, cement, and other construction materials, primarily sourced from Europe and Latin America.
“When a port closes down it is not an immediate impact, it is a ripple effect until things normalise,” commented Stamatis Tsantanis, chairman and CEO of Greek dry bulk giant Seanergy Maritime. “A port shutdown creates a backlog of ships and the backlog of ships takes it then a longer to its next destination and then to the next destination. So that impact doesn’t happen immediately but you feel the impact down the line months after.”
The original article: belongs to Splash247 .
