Last month, the International Longshoremen’s Association (ILA) made headlines by launching a major strike involving 45,000 dockworkers along the US East and Gulf coasts – the first of its kind since 1977. The strike occurred at the beginning of holiday shopping season at the ports, which manage roughly half of the cargo from ships arriving in and departing from the United States.
Yet, just as tensions peaked, the ILA announced a pause on their planned three-day strike after reaching a preliminary wage agreement with the U.S. Maritime Alliance. While this temporary truce brings immediate relief, it also highlights the fragility of labour relations in the shipping sector.
With the tentative deal set to last until January 15, 2025, the looming threat of future strikes hangs over port operations and the broader global shipping chain. As negotiations continue, the stakes are higher than ever – will they settle on an agreement, are we just witnessing the calm before the storm?
Understanding the strike
The dockworkers’ strike was fueled by their calls for higher wages and concerns about job security due to automation. The union is not only seeking significant pay increases but also a complete ban on automating gates, cranes, and container-moving trucks at the ports.
As technology continues to evolve, tensions between labour and automation are escalating, making this a crucial moment to explore the implications for the shipping industry.
With the potential for more US East Coast port strikes remaining uncertain, the maritime consultancy developed scenarios featuring a strike in January and one without, concluding that in both models, freight rates would still continue to rise. This underscores the ongoing challenges facing the shipping industry, as highlighted in a recent Loadster article.
To delve deeper into these developments, we spoke with our Pricing Manager Mathew Grundy, who shared his insights on how these factors are reshaping the landscape of global shipping and what businesses should consider moving forward.
Question: How do the factors contributing to the dockworkers’ strike – such as contract expiration, wage disputes, automation, working conditions, and the overall economic context – affect supply chain efficiency in the global shipping industry?
Mathew Grundy: Dockworkers’ unions hold significant power because when they go on strike, port operations stop, and the movement of containers in and out of a port ceases during the strike period. Because of this power, the unions are able to negotiate substantial wages, and these wage costs are passed on to importers and exporters through high port charges.
Port strikes also create significant backlogs, affecting the entire industry through transport delays and increased storage costs.
Question: What should Australian businesses consider when developing their shipping strategies in response to the recent dockworkers’ strike, particularly regarding international trade and freight costs?
Mathew Grundy: Diversifying the markets from which Australian businesses source their products is essential. If a client is importing 100% of their products from the USA, they are open to being severely impacted by any potential supply chain disruptions that occur as a result of strikes, weather events, economic factors, etc.
However, if a client is sourcing 20% of their goods from China, 20% from the USA, 20% from Germany, 20% from Indonesia, and 20% from India, they are mitigating the risk of the previously mentioned factors severely impacting their operations.
Question: What does the temporary end of the dockworkers’ strike mean for the future? Should we expect ongoing volatility in the shipping environment into 2025?
Mathew Grundy: I’d say there will continue to be strikes, in the USA especially, as ports try to go fully automated. There is always volatility in the freight industry so this is something businesses must factor in when buying products from overseas.
Impact of U.S. elections
Looking ahead, the upcoming U.S. elections could add another layer of complexity to the shipping industry’s landscape. Labour issues often take centre stage during campaigns, and political candidates might use these topics to appeal to voters, potentially impacting discussions around labour practices and supply chain resilience.
For instance, former President Trump has hinted at plans to impose tariffs on Chinese-made products if he returns to office, aiming to bolster U.S. manufacturing against cheaper imports. Such policies could complicate international trade for businesses and reshape dynamics in the shipping sector.
While it’s difficult to predict the direct effects of the elections on the dockworkers’ strike, it’s clear that labour dynamics, automation, and economic conditions are all evolving. This ever-changing environment means businesses need to stay alert and be ready to adapt to whatever comes next.
As the political landscape evolves, businesses must also consider how these external factors will influence their shipping strategies moving forward.
Future outlook
The temporary suspension of the strike provides a brief reprieve, but ongoing volatility in the shipping industry is likely. As U.S. ports increasingly pursue automation, tensions between dockworkers and management are expected to persist. We might see strikes become more frequent as workers advocate for their rights and job security amid these technological advancements.
To prepare for potential disruptions, businesses should develop contingency plans and maintain open lines of communication with suppliers and logistics partners. As a trusted freight forwarder, Stockwells is here to support you in navigating these challenges. We can help you optimise your shipping strategies, diversify your supply chains, and ensure that your operations remain resilient in the face of uncertainty.
Get in touch with Stockwells today – your reliable partner in freight forwarding.