A global container shipping blockage that could have created logjams into 2025 was averted on 4 October, but repercussions will still ripple through global supply chains.

30 September was the crucial date when a six-year master contract between the International Longshoremen’s Association (ILA) — the largest union of maritime workers in North America — and the United States Maritime Alliance covering East and Gulf Coast ports, was due to expire. The contract included six of the 10 busiest U.S. ports, handling more than 13 million containers annually, covering three dozen ports.

On the expiration of its Master Contract with the United States Maritime Alliance (USMX) members of the International Longshoremen's Association (ILA) walked out on Tuesday 1 October, halting container traffic at all major ports along the East and Gulf coasts.

However, after a brief closure, ILA members resumed work on Friday, 4 October, agreeing to return to the bargaining table to negotiate "outstanding issues" under a tentative agreement set to expire on 15 January 2025.

The challenge for consensus

The ILA and USMX had struggled to reach a consensus on a new contract for nearly two years. This stalemate led to a shift in Asian imports away from the U.S. East Coast in 2024, with shippers favouring U.S. West Coast routes instead. Many also opted to move cargo earlier to avoid the 1 October deadline. Some had also been sourcing scarce air cargo capacity for urgent deliveries of valuable items.

The ILA has primarily been negotiating over wages and automation. Under the tentative new agreement, ILA wages are expected to rise by 62 percent over the next six years. Previously, the ILA had sought a reported 77 percent increase, while USMX had offered around 50 percent.

On the issue of automation, the ILA has taken a hard stance against any technology—automated or semi-automated—that it believes could jeopardize ILA jobs. Harold Daggett, president of the ILA, has even labelled automation as "a cancer."

The USMX contends that U.S. port productivity lags behind global standards and that enhancing efficiency is vital for maintaining US economic competitiveness. With additional space at terminals scarce, increasing productivity is viewed as the only way to manage rising volumes at many ports.

Negotiations around automation are expected to be tense in the coming months, and many analysts view the tentative agreement as a temporary solution rather than a solid foundation for a final deal.

The ripple effects of disruption

Despite the agreement, supply chain repercussions are still unfolding. Liner executives typically estimate that every day a port is inactive results in approximately a week needed to resolve the ensuing cargo, shipping rotation, and equipment disruptions. In Asia, delays in equipment returning from the U.S. aggravated port congestion, and ongoing blank sailings are likely.

DHL’s October Ocean Freight Market Update noted that while the port strike had little impact on rates—thanks to shippers moving shipments forward—cost recovery surcharges have been implemented by all carriers.

"Some of our customers had already made the decision to divert most of their cargo to the west coast as early as two months ago," said Praveen Gregory, Senior Vice President, Ocean Freight, DHL Global Forwarding Asia Pacific. "But for customers who continued to move cargo to the East Coast , the strike could have caused significant delays in getting the containers discharged. After the strike was resolved, we saw vessels resume their normal schedules without significant impact to vessel rotations."

The dynamic situation in the U.S. requires constant monitoring and adjustment. For West Coast ports, the rising volumes have seen potential delays due to the insufficient supply of rail cars returning there. With the East Coast situation temporarily resolved, and Norfolk Southern and CSX rail freight moving out of the East Coast ports, shippers are now looking to the east as a viable alternative to balance out the demand, for now.

According to Niki Frank, CEO, DHL Global Forwarding Asia Pacific, while some disruption is to be expected in the aftermath of the strike, business will likely to return to normal toward the end of the month, barring any black swan events.

"Our initial feedback from customers indicates that many will continue to prefer U.S. West Coast ports where feasible, so we will continue to support them with optimal solutions until the situation at East and Gulf Coast terminals is fully resolved," said Frank. "We are also staying mindful of the 15 January deadline and hoping for no further complications. Following that, we will have to see what happens with automation. Ideally, the parties will reach an agreement that allows U.S. port productivity to align with the service standards and speeds seen at European and Asian ports."

Schedule reliability

Sea-Intelligence’s latest Global Liner Performance (GLP) report covering carrier performance in August revealed that schedule reliability levels have now stabilised in the 50-55 percent range, with August data coming in a 52.8 percent, ten percentage points worse than a year ago.

"Maersk was the most reliable top 13 carrier in August 2024 with schedule reliability of 54.7 percent, followed by Hapag-Lloyd with 54.3 percent,"reported Sea Intelligence. "Another eight carriers were above the 50 percent mark, with PIL the least reliable at 37.2 percent."

DHL’s October Ocean Freight Market Update noted that some 9.9 percent (more than 3 million TEU) of the global container fleet is currently waiting to load or unload at anchorages, the "highest level recorded outside of the Covid pandemic".

It adds that there has been some congestion at LA/Long Beach on the U.S. west coast, while vessel bunching at Shanghai and Ningbo ports after Typhoon Babinka caused congestion which impacted other Asian ports. Five day waiting times were also recorded at several Mexican, Brazilian and some Caribbean ports.