East and Gulf Coast port operators have begun prepping for workers to strike on Oct. 1 – a sign that there’s increased concern that a work stoppage will actually occur.

A strike would, at minimum, cause considerable supply chain disruption for the promotional products market and importers/exporters across industries.

Deleterious effects would include increasing the time, complexity and cost it takes to get products produced overseas landed and stocked in the United States – something that could, if pronounced enough, lead to inventory shortages. The longer the strike, the deeper the disruption, which some analysts have said could be “crippling” to the economy.

On Sept. 19, CNBC reported that the Port of New York/New Jersey has started preparing for a total stoppage of work by the International Longshoremen’s Association (ILA), the largest union in North America for maritime workers, representing 85,000 members along the East and Gulf Coast ports.

Beth Rooney, port director of the Port Authority of New York and New Jersey, told CNBC that the authority has talked with ocean carriers and terminal operators regarding the managing of cargo. In particular, talks reportedly focused on getting cargo off terminals before a strike stops operations.

The Port of Houston is also taking steps, posting a notice on Sept. 18 that said it encourages all “imports to be picked up as soon as possible. Anything in the yard after 7 p.m. on September 30^th, 2024, will be unavailable until the work stoppage ends.”

The growing threat of a potentially supply chain-hobbling strike at East/Gulf Coast ports is sparking concern & prompting adaptive action from #promoproducts suppliers. What does it mean for inventory during the pivotal holiday gifting period?https://t.co/AdspWlJSFy#supplychain

— Chris Ruvo (@ChrisR_ASI) August 28, 2024

“If the risk of a work stoppage remains during the week of September 23^rd, Port Houston will evaluate the need for additional gate hours,” the notice continued. “We do plan to offer a Saturday Gate on September 28^th, 2024. … In the event of a work stoppage, we will consider extended gate hours once operations resume to ensure a quick and smooth recovery for everyone.”

Elsewhere, the Georgia Ports Authority told importers to get their goods landed “well before Oct. 1 to minimize any disruptions.” It’s reportedly opening gates on the weekend to support an anticipated influx.

As the ports prep, shipping carriers are implementing surcharges in reaction to strike-related disruption, The Maritime Executive reported.

“Both CMA CGM and Hapag-Lloyd followed an earlier notification by Mediterranean Shipping Company informing customers of their intent to start charging surcharges for both imports and exports from the impacted ports,” the publication said.

Where Does the Contract Fight Stand?

ILA membership has approved striking on Oct. 1 if a deal is not reached on a new contract. The current contract expires Sept. 30.

Reports indicate the ILA wants a 32% pay rate increase over the life of the contract for workers, in line with a rise unionized West Coast port pros received in 2022 at the conclusion of a contentious contract negotiation, throughout which the shadow of a strike loomed.

If the ILA strikes, five of the 10 busiest ports in North America would shutter. Overall, 36 ports would close from Maine to Texas, affecting nearly half of all import traffic into the United States – which equates to billions of dollars. The buildup of containers from a two-week-long strike – 14 days – would take nearly three months – 84 days – to resolve.

Container lines roll out US East Coast surcharges as port strike looms https://t.co/JSJrpZNRyV pic.twitter.com/XlcQdnDvsL

— The ILA App (@TheILAmobileApp) September 19, 2024

Leadership from the ILA and the U.S. Maritime Alliance (USMX) – a port management organization whose members include Maersk, APM Terminals and Mediterranean Shipping Company – are reportedly not talking. The union broke off negotiations in June, in significant part over what it said was job-killing automation at the Port of Mobile – a violation of the current contract, the union alleged.

“We don’t want any form of semi-automation or full automation,” the ILA said in a recent statement. “We want our jobs – the jobs we have historically done for over 132 years.”

The alliance has said that it’s been in talks with ILA local chapters but not leadership. “USMX has been unable to secure a meeting with the ILA to resume negotiations on a new master contract,” the group said in a statement.

If a strike occurs, importers could shift shipments to non-striking ports on the West Coast – something some promo firms have said they are looking to do.

Indeed, the effort is already underway: This August, the Port of Long Beach in California had the strongest month in its history, with imports soaring more than 40% year over year and exports rising 12% as shippers moved cargo away from the East and Gulf Coasts. The shift west would likely become more pronounced in the event of an East/Gulf Coast strike, potentially leading to backups/delays at Pacific ports.

A two-week-long strike – 14 days
–would take nearly three months
–84 days – to resolve.

President Joe Biden’s administration, which has repeatedly expressed support for unions, said it would not force port workers back to their jobs if a strike occurs.

The Taft-Hartley Act empowers the president to intercede in labor disputes that threaten national security or safety by mandating a “cooling-off period” for 80 days. That includes workers having to get back to work.

“We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now,” a Biden administration official recently said. “We encourage all parties to remain at the bargaining table and negotiate in good faith.”

The vast majority of products sold in the North American promo market are manufactured overseas and must be brought in through ports. Importers are typically suppliers, but distributors that do business directly with foreign vendors have product shipped from abroad, too.

Leading industry suppliers have told ASI Media that they’ve been taking adaptive action to best bulwark their supply chains in the event of a strike. At this point, suppliers believe their stock levels will remain strong through year’s end.

“We are monitoring the situation at East and Gulf Coast ports closely and are confident that if a shutdown indeed does happen, we will be able to maintain a healthy supply chain,” Paul Hirsch, CEO of Houston-based supplier HIRSCH (asi/61005), has said. “Only time will tell.”