Strike threats at the horizon.....
Given the enormous potential impact of the US dockworker strike on all shipping, the focus of this week’s report is on what the collateral effects of a strike might be on reefer. Unless the International Longshoremen’s Alliance (ILA) and the United States Maritime Alliance (USMX) reach a settlement in the next few days, the container ports on the US eastern seaboard and Gulf Coast will come to a standstill. The portents are not good: the ILA, noting the windfalls earned by the carriers during aftermath of the Covid supply chain disruptions, is holding out for wage increases that would amount to 80% over the 6-year timeframe of the master contract. In contrast, the USMX continues to point to the 32% agreed by longshoremen on the US West Coast during summer, 2023. If a contract is not agreed by this Sunday, the ILA will be positioned to strike on Monday. If it goes ahead, the strike will paralyse container ports and compromise the movement of containers. There will be chaos.
Both ports and carriers have taken steps to mitigate the impact. Ports have been encouraging importers to collect their cargo, with the Port of New York and New Jersey warning that in the event of a strike, there will be no staff to monitor or adjust refrigerated containers left on terminal after Monday. On Monday this week, Maersk said that due to potential labour disruptions, it is to impose a local Port Disruption Surcharge for all cargo moving to and from U.S. East Coast and Gulf Coast terminals, effective October 21, 2024. The charge amount per equipment size is US$1,500 per TEU and US$3,000 for FFE.
While they won’t say so publicly, the carriers are not unhappy about the potential disruption. Stock markets support this view - earlier this week, AP Moller-Maersk shares jumped as much as 4.9%, extending recent gains on expectations that labour talks with US port workers will fail, thereby sparking a new round of supply-line disruptions that would boost freight rates. For Maersk and other container lines, a strike would add to a string of global trade disruptions in recent years, including the Covid-19 pandemic and attacks on ships in the Red Sea, which have boosted the freight rates they can charge their customers. Maersk has said that even a one-week US strike could have a large ripple-effect impact on supply chains, causing 4-6 weeks of disruptions.
However, should a strike go ahead, containerised reefer cargo may end up stranded in ports without access to power.
The potential for a strike comes as the southern hemisphere citrus and kiwifruit seasons come to an end and several weeks before the deciduous season begins. If the strike goes ahead and remains unresolved for several weeks, it will also affect citrus from Morocco and blueberries from Peru and Chile......../.........