Surcharges Loom as Labor Disruptions Threaten US East and Gulf Coast Ports
As the countdown for strike action at ports along the US East and Gulf coasts ticks down, shipping lines have begun announcing surcharges in anticipation of labor disruptions. Because a strike date is set for October 1st, carriers implement these emergency operations surcharges to offset the expected costs and challenges of potential port blockages and slowdowns. Now is when importers and exporters alike need a strong logistics partner in their corner. Bestway International can help you prepare for surcharges and delays that may pop up during a work stoppage.
Upcoming Surcharges
Major shipping lines announced their new surcharges quickly, as under US Federal Maritime Regulations, carriers must notify customers of price hikes or surcharges at least 30 days before implementation.
These surcharges reflect the broader uncertainty surrounding the negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX), with potential significant disruption to port operations.
Potential Impacts on Global Supply Chains
According to Lars Jensen, CEO of Vespucci Maritime, vessels calling US ports in early October might be delayed. Still, their absence from Asian supply chains wouldn’t be noticeable for five to seven weeks. If the strike continues through the pre-Chinese New Year rush, the effects on global container shipping will be far-reaching.
Jensen also warned that carriers have learned to price aggressively in capacity-constrained markets, as seen during the pandemic and other recent crises. This means that if a strike does take place, shippers can expect rates to rise rapidly, well beyond normal cost increases.
High-Risk Sectors: Automotive and Agriculture
For US exporters, the automotive and agricultural sectors could be particularly vulnerable to the effects of a prolonged strike. The automotive industry, already grappling with supply chain challenges, could face production slowdowns or temporary plant closures. For agricultural exporters, a strike could lead to inventory shortages and disrupt exports, potentially increasing food prices in countries dependent on American produce. Shortages and delays could also plague the holiday shopping season for truckers and retailers, further upsetting year-end manufacturing shipments.
Get Ready for Disruption
As the sand continues to filter through the hourglass, importers and exporters must prepare for the resulting surcharges, delays, and capacity problems. Companies should work with their logistics partners to develop contingency plans that include alternative shipping methods, such as air freight, to mitigate the impact of any port strike.
“It’s important that we don’t present ourselves as being able to get containers off a vessel or out of a port that isn’t functioning because of the work stoppage. At this stage, it’s too late to do anything different for anything in transit. We can help with alternative routings for cargo that’s not moving yet, but we aren’t going to be able to rescue anyone’s container.” –Bestway International’s Chance Pope
During times of disruption and uncertainty, having an expert logistics partner in your corner makes all the difference. If you’re concerned your cargo will be impacted and want to understand the potential surcharges, reach out to Bestway for a review of your current import business.
