Major port strike has started in the US

This article was last updated on October 1, 2024

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Major port strike has started in the US, what does that mean for the Netherlands?

The shipping sector has been taking this into account for some time, but it is now really happening. As of today, port staff along the American east coast and in the Gulf of Mexico will stop work. It is a strike involving tens of thousands of employees and which could have a significant impact on the global shipping trade.

The strike was announced by the International Longshoremen’s Association (ILA), a union representing 47,000 workers. Discussions between the union and shipping companies about the new labor contract came to a standstill in June. Since then, there has been little talk between the two sides, so the ILA continued the strike. It is the first time since 1977 that the union has gone on strike.

Inflation

The port union is demanding a gradual wage increase of 77 percent. In concrete terms, this increase means that the hourly rate of workers will increase by five dollars every year for six years. The ILA wants this because of rising inflation. The United States Maritime Alliance, the employers’ association, is prepared to gradually increase salaries by 40 percent.

Another demand from the union is that more agreements are made about the automation of work. In this way, they want to prevent staff from losing their jobs in the future. The strike will only take place on the East Coast, employees on the West Coast are covered by a different union and have different conditions.

It will be interesting to see how long the ports will be shut down. “If the strike lasts a week, the impact will be limited for the rest of the world, but if it lasts longer there will certainly be an impact,” expects Rico Luman, economist at ING.

Problems could arise for anyone trading goods with China.

Casper Roerade from Evofenedex

In the event of a long strike, problems may arise with global container capacity. “Then containers will no longer be able to arrive in Asia on time and a shortage will arise. They will notice this especially in China,” expects Casper Roerade of trade association Evofenedex. “This creates a problem for anyone who trades with China.”

Luman also expects problems with containers. “The daily prices for containers were falling, but they will probably rise again if this lasts longer.” The strike comes on top of ongoing problems in the Red Sea. Due to attacks by the Houthis, ships have to detour and their journey takes at least ten days longer.

These are consequences that we also notice in the Netherlands. Ships now en route to US ports will have to wait when the strike starts. “They remain anchored off the coast because it is no longer possible to unload,” says Roerade. “The same applies to the products that America exports, which remain in storage.”

Detour takes a long time

It is not expected that we will now have empty shelves in the Netherlands. “Not very large volumes arrive from America,” says the economist. This mainly concerns products for industry, such as lasers or car parts.

Ships can detour to the west coast, but that will take weeks longer. “Companies may have seen it coming and built up a little more inventory, but this is quite difficult to avoid,” says Luman.

Fewer bananas

In America the consequences will be much greater. The industry in particular can feel the strike immediately. “This concerns, for example, the automotive industry that receives fewer parts. Production can therefore slow down,” says Roerade.

It is expected that most shelves in stores will remain filled. There may be fewer bananas and cherries. Almost all of these are imported by ship.

The holidays also seem to get off to a good start. The strike had been in the air for months and that is why companies already made purchases in May or June, writes CNN. “A one-day strike takes three to five days to recover. The longer it goes on, the worse it gets,” an executive with the National Retail Federation told the news channel.

So it remains to be seen when the parties will sit around the table again. President Biden may choose to use a law to end the strike, but American media write that Biden – who often supports the unions – does not intend to use the law in the run-up to the presidential elections.