The largest port on the U.S. East Coast, located in New York/New Jersey, is preparing for a potential union strike, which could mark the first such occurrence since 1977.

• The International Longshoreman's Association, the largest union in North America, is preparing for a complete work stoppage at the Port of New York/New Jersey, according to executives who spoke to CNBC.
• Over 85,000 port workers are represented by the ILA, and a strike would halt operations at five of the ten busiest ports in North America, as well as 36 ports along the East and Gulf Coasts.
• Billions of dollars in U.S. trade would be affected if more than half of monthly imports were impacted, as logistics firms prepare for contingency plans similar to those used during Covid and 2018 tariffs.

Port of New York/New Jersey officials have begun preparing for a potential complete work stoppage by the International Longshoreman's Association (ILA), the largest union in North America. The ILA represents over 85,000 longshoremen and a strike would shut down five of the 10 busiest ports in North America, and a total of 36 ports along the East and Gulf Coasts, on October 1. Between 43%-49% of all U.S. imports and billions of dollars in trade monthly are at stake as the union moves closer to the Oct. 1 deadline for a new contract. However, cruise operations would continue.

The summer talks with port ownership broke down, and it is unclear if any progress has been made. The ILA's rank-and-file recently voted unanimously to authorize a strike, and the group representing port management, the United States Maritime Alliance, believes the union has already made the decision to strike.

The Port Authority of New York and New Jersey has been in talks with ocean carriers and terminal operators to prevent a pile-up of containers, and individual operators are announcing their plans to reduce operations to avoid an interruption.

"Rooney stated that several ocean carriers have announced their plans to embargo export cargo coming to the East Coast from the Midwest. The further away the cargo is coming from within the hinterland, the earlier it would be embargoed. In the event of a strike and operations cease, vessels would either wait in a designated area or slow steam as they did during Covid to delay their arrival. Once the strike is over, the Coast Guard would lead the charge in an orderly flow of vessels entering the port."

Jim Mancini, the vice president of North American surface Transportation, stated in a recent blog post that not only U.S. companies and suppliers, but also supply chains across Europe, Oceania, Latin America, and Asia would be impacted.

"Although the APAC region offers more possibilities to transport freight to the West Coast, more than half of the automotive freight arriving today relies heavily on the East Coast. For instance, the Germany to Charleston and Savannah corridor is critical for European automakers, who would be halted in the event of a strike. Currently, only two container service loops connect Europe to the U.S. West Coast."

The Biden administration has stated that it will not utilize Taft-Hartley Act powers to compel union members to resume work, as initially reported by CNBC, and has encouraged the parties to engage in further negotiations. According to a Biden administration spokesperson, "We have never invoked Taft-Hartley to break a strike and are not considering doing so now" (Sept. 4, CNBC).

If forced to return to work, union members would intentionally slow down, resulting in a backlog of containers and hindering supply chain efficiency.

Other ports, like The Port of New York/New Jersey, have publicly posted strike contingency plans.

The Port of Houston has published its strike prep guidance for customers and may extend gate hours during the week of September 23. Additionally, the port plans to open the gates on Saturday, September 28, pending confirmation early next week.

Since early to mid-August, the vessels scheduled to arrive at East Coast and Gulf ports have been sailing across the ocean.

The stalemate between the International Longshoremen's Association and the United States Maritime Alliance has led to the development of contingency plans. The two sides have differing views on wages and automation, with the ILA opposing the use of an automated gate system in Mobile, Alabama and other ports. On June 10, the ILA announced the suspension of talks regarding this issue.

In recent months, there has been a significant shift of cargo from the East to West Coast due to the possibility of a strike, as advised by logistics experts to CNBC.

Port of Long Beach CEO Mario Cordero stated that the port is prepared to handle an increase in cargo if a labor strike at the East and Gulf Coast ports takes place. The month of August was the port's strongest month in its 113-year history, with imports increasing by 40.4% and exports rising by 12% year over year.

COO Noel Hacegaba stated at a press conference that our terminal operators are ready to adjust their gate hours and our overflow site, the STOR facility at Pier S, is open with available capacity.

Daggett referenced the 1977 ILA strike in his recent comments to union members, recalling how he and other ILA members traveled to the West Coast to encourage West Coast port workers to support their cause.

According to Port of Los Angeles executive director Gene Seroka, Harold Daggett must state that there is no evidence of cargo ships taking a left-hand turn from Eastern and Gulf Coast ports to Los Angeles. There has been a tradition among labor organizations not to exploit each other's collective bargaining process, and this practice has not occurred since the 1970s. Seroka believes that this trend will not be repeated in the future.

The ILA did not respond to a request for comment.

In August, the Port of Los Angeles reported a near-record 960,597 TEUs, a 16% increase from the previous year. This made it the busiest non-pandemic month at the port. Despite being only eight months into 2024, the Port of Los Angeles is already 17% ahead of its 2023 pace, having moved nearly one million more containers than it did last year.

Fears of supply chain congestion

The maritime industry is already forecasting congestion levels. If the ILA goes on strike for one day, it could take five days to clear. A one-week strike in October could cause slowdowns until mid-November. If the strike lasts for two weeks, it would take you into January due to the congestion of ships and the backup of containers.

To avoid a strike by the labor union, shippers pushed the peak season earlier by a month this year, ensuring their holiday products would be in before a work stoppage.

According to Xeneta data, there was a nearly 2% decline in import tonnage processed by East Coast labor between Q4 2023 and Q2 2024.

The percentage of container imports from the Far East into the U.S. on the East Coast decreased from 34.4% in Q4 2023 to 32.6% in Q2 2024, while the West Coast share increased from 57.7% in Q4 2023 to 60% in Q2 2024. The remaining containers were imported through the U.S. Gulf Coast.

The amount of containers moved by ILA workers affects their royalty income due to trade diversion.

A Mitre analysis commissioned by the US Chamber of Commerce predicts that a 30-day strike at the ports of New York and New Jersey could result in an economic impact of up to $641 million per day. In Virginia, an economic impact of $600 million per day is forecast, or approximately $18 billion over 30 days. The export impacts at Houston operations could reach $51 million per day, and $41.5 million per day for imports.

Some transport companies are continuing with their container diversions, as Seko Logistics has transitioned some clients to the West Coast and is now moving eastbound containers via transloading to help mitigate congestion.

A CSX representative stated to CNBC that they are closely monitoring the situation and will proactively communicate with their customers about any necessary operational actions.

Goetz Alebrand, DHL Global Forwarding's Head of Ocean Freight Americas, informs CNBC that the company is diversifying client routes and transloading. Additionally, Alebrand explains that DHL is utilizing peel piles to manage container flow and is actively exploring alternative rail and trucking options to minimize disruptions caused by limited rail car supply on certain lanes.

Time-sensitive or high-value goods can be transported using airfreight, although it is more expensive.

ITS Logistics' vice president of global supply chain, Paul Brashier, informs CNBC that the company has put into action its post-Covid and 2018 tariff contingency plan.

"To optimize freight movement at ports with extended hours, we have relocated truck chassis and organized trucks into groups in the Southeast, Gulf, and Mid-Atlantic regions. We then place containers in expanded yards for later pickup."