‘Last Chance’ to Ship In Time Before East Coast Port Strike
Shippers looking to move cargo into the U.S. East and Gulf Coast ports may want to hurry up.
According to the Ocean Timeliness Indicator (OTI) from Flexport, containers now take 61 days to be transported from China to the U.S. East Coast. As of Wednesday, that marks roughly two months from Sept. 23—just one week before the Sept. 30 expiration of the current contract for union dockworkers represented by the International Longshoremen’s Association (ILA).
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Those labor talks with the United States Maritime Alliance (USMX) are currently at an impasse, with the union remaining adamant that it will go on strike Oct. 1 if a new contract is not agreed upon. The USMX, on the other hand, has said it “remains ready, willing and able to return to the bargaining table with the ILA” to resume master contract negotiations.
And if such a labor stoppage took place, container ships docking at 36 ports from Maine to Texas would be unable to load and unload cargo—forcing more vessels to divert elsewhere and leading to more port backlogs on the West Coast.
“This week is the last chance for an average shipper to get product moved from the exporter in time to be sure to make it before a potential strike hits the U.S. East Coast ports,” Lars Jensen, CEO of container shipping consultancy Vespucci Maritime, said in a LinkedIn post. “Some shippers might have a shorter landside operation in China and/or use a more expedited shipping route, but even these are in the near term hitting the point where any additional cargo shipped on this route runs the risk of being impacted by labor disruptions.”
Retailers have already been pulling forward cargo into the U.S. ahead of the traditional August-to-October peak shipping season in recent months as a way to get out in front of the heavy demand of the back-to-school shopping season and the 2024 holiday.
While inbound cargo volume at major U.S. ports in May reached its highest level since August 2022, imports rose even further in June, according to S&P Global Market Intelligence. This is atypical from the slight dip in June ahead of the peak season, and further indicative that shippers are loading up on goods early.
According to Port of Long Beach CEO Mario Cordero, the gateway has been “recapturing market share” as the strike threat lingers and peak season is under way. And Gene Seroka, the executive director at the Port of Los Angeles, said on July 17 that 63 ships were en route to the Los Angeles and Long Beach port complex, versus 52 to 55 typically.
Flexport’s weekly OTI captures the timeliness of three trade-lanes: Asia to the U.S. West Coast, Asia to the U.S. East Coast, and from Asia to Northern Europe. The Asia-to-East Coast trade lane dipped from the week prior, falling from 62 to 61 days.
But this trade lane has seen a significant uptick in OTI on a three-month basis, with cargo on the China-to-East Coast route only taking 50 days to get to its destination as of April 22.
On a weekly basis, the OTI from Asia to the West Coast fell half a day from 41 to 40.5 days but is up from a 32-day voyage three months ago.
The OTI from China to Northern Europe had a slight half-day increase from 69 days to 69.5 days this week, up from 64 days in late April, with Flexport attributing the numbers to European port congestion nearing pandemic-level highs.
Flexport calculates the OTI from the cargo-ready date at the exporters’ factory or warehouse to the containers’ departure from the destination ocean port. Measurement of the Asia-to-U.S. East Coast trade lane uses the China ports of Shanghai and Ningbo and the U.S. ports of New York/New Jersey and Virginia.
The metric displays transit times based on a trailing two-week median and excludes premium services.
As potential lead times into U.S. ports could continue to grow and shippers make decisions on how to procure their freight, the central concerns within the ILA-USMX labor battle remain around wages, a “hero bonus” from pandemic-era work and the use of automation.
Recognizing the concerns that come to their business with a strike, roughly 160 trade associations including the National Retail Federation and U.S. Chamber of Commerce sent a joint letter to the Biden administration to immediately work with both parties to resume contract negotiations. The ILA’s position has run counter to this, with the union insisting that no federal intervention takes place.