The International Longshoremen’s Association (ILA), the union representing port workers at 36 ports on the East and Gulf Coasts of the U.S., is threatening to strike due to unresolved issues regarding their new contract. The current contract is set to expire on September 30, with the potential strike starting on October 1. The key points of contention between the ILA and port operators include wages, benefits, and port automation.
Lessons from Previous Strikes
The U.S. West Coast experienced similar disruptions in June 2023 due to delays in reaching a new contract. On June 3, 2023, after working without a contract since July 2022, union workers staged a “no-show,” where none reported to work for the day.
The chart below shows the impact on export dwell times during this period.
After just one day of closures, it took three weeks for ports to return to normal dwell times, with delays increasing by as much as 148%. If a full-scale strike occurs on the East Coast, it would likely last longer than one day, and the disruptions would be even more severe.
Some shippers estimate that for every one week of an ILA strike, it would take 4-6 weeks to fully recover. This could send ripple effects through global supply chains, potentially lasting for the remainder of 2024.
Impacts of a Strike in the East and Gulf Coasts
A strike would have serious consequences for global supply chains. The East Coast ports handle approximately 35-40% of U.S. imports and exports, while the Gulf Coast ports account for 10-15% of imports and 20-25% of exports. While these percentages reflect overall trade volumes, certain industries would be disproportionately affected. Below is a breakdown of major imports and exports by region.
Gulf Coast Ports:
Energy and Petrochemicals:
Gulf Coast ports, especially Houston and New Orleans, handle 60-70% of the U.S. exports of crude oil, refined petroleum products, and natural gas.
A significant portion of the petrochemical supply chain, including plastics and chemical feedstocks, also moves through these ports.
Agriculture:
About 60% of U.S. grain and soybean exports flow through Gulf Coast ports, with New Orleans being a major hub for agriculture exports from the Midwest.
Heavy Manufacturing & Machinery:
Gulf Coast ports handle around 25-30% of U.S. exports of industrial machinery and heavy equipment, much of it bound for Latin America and Europe.
East Coast Ports:
Retail and Consumer Goods:
East Coast ports manage 35-40% of U.S. consumer goods imports such as electronics, clothing, and furniture. Ports like New York/New Jersey and Savannah are critical for trade with Europe and Asia.
Many of these imports are destined for the East Coast and Midwest retail markets.
Automotive Industry:
Approximately 30-35% of U.S. automotive imports and exports pass through East Coast ports, especially vehicles and parts from Europe. The Port of Baltimore is a key hub for RoRo (Roll-on/Roll-off) vessels. When the port temporarily halted operations, the industry remained stable by rerouting shipments to nearby ports. However, if a strike occurs in October, disruptions to manufacturing will likely be unavoidable.
Pharmaceuticals and Chemicals:
Approximately 30-35% of U.S. pharmaceutical imports flow through East Coast ports. This includes active pharmaceutical ingredients (APIs) and finished drugs from Europe, India, and other regions.
Food and Beverages:
East Coast ports manage 30-40% of U.S. food and beverage imports, including perishables like produce, seafood, and processed foods from Europe and Africa.
Industries Affected by Both Coasts:
Construction Materials:
Combined, the East and Gulf Coast ports handle about 25-30% of U.S. imports of steel, cement, and other construction materials, primarily sourced from Europe and Latin America.
Impacts to Peak Season
The timing of a potential strike is critical, as it would occur during the ocean peak season (August through October), when retailers are importing goods for the upcoming holiday shopping period. Since East Coast ports handle 35-40% of U.S. consumer goods imports, and it is too late for companies to divert peak season volumes to the West Coast, a strike in October would significantly impact retailers’ ability to stock inventory in time for the holidays.
While some retailers may turn to air freight as an alternative, this market is both constrained and substantially more expensive, making it an impractical solution for large-scale imports.
Summary
The potential strike by the International Longshoremen’s Association on the East and Gulf Coasts threatens to significantly disrupt U.S. supply chains, particularly as it coincides with the crucial peak retail season. Key industries such as energy, agriculture, and retail, along with sectors dependent on consumer goods and construction materials, will face severe delays if port operations are halted. Previous strikes on the West Coast have demonstrated the long-lasting effects of such disruptions, with recovery times stretching weeks beyond the initial stoppage. If the strike proceeds as threatened, the ripple effects will likely be felt throughout the global economy, with long-term repercussions for importers, exporters, and consumers alike.
