ALERTS & ​ADVISORIES

In a pivotal development for global logistics, the International Longshoremen's Association (ILA) and the U.S. Maritime Alliance (USMX) jointly announced late on October 3 that they reached a tentative wage agreement. The Master Contract, governing work at East and Gulf Coast ports, has been extended until January 15, 2025, allowing further negotiations on unresolved issues. As a result, all job actions have ceased, and port operations will resume immediately under the Master Contract.

While this agreement averts a prolonged crisis that could have severely impacted global supply chains, the three-day strike has already caused significant operational disruptions. It is anticipated that full port recovery will take between 2-3 weeks, depending on how swiftly dockworkers manage the backlog of vessels waiting to unload billions of dollars worth of goods. However, it is important to note that not all terminals have reopened immediately. Some port gates will only reopen on October 7, and vessel operations have staggered reopening times, further complicating the situation.

Vessels Anchored and Congestion Worsening

Even though operations have restarted, many container ships remain anchored off the U.S. East and Gulf Coasts, and new vessels continue to arrive. Several ships have diverted to ports such as Freeport, Bahamas, to offload U.S.-bound cargo. This diversion risks creating bottlenecks at critical transshipment hubs, including Cartagena, Panama, Kingston, and Caucedo. Clearing the backlog at these ports may take time, potentially leading to delays across global supply chains.

Spike in Freight Rates Linked to Strikes

Recent data indicates that freight rates have surged, with shippers feeling the direct impact of the strikes. On the most affected routes, such as North Europe to the U.S. East Coast, average spot rates have increased by 58% since the end of August. This highlights the immediate financial strain on businesses that rely on stable shipping rates.

Force Majeure, Surcharges, and Carrier Adjustments

Before the agreement, most major carriers, including COSCO, ONE,  CMA CGM, and Evergreen, declared force majeure, which could result in additional charges for shippers in the coming weeks. Even though the strike has ended, it forced carriers to divert containers to alternative ports outside the U.S., creating further complications.

With the reopening of ports, shippers should stay vigilant regarding potential detention and demurrage fees, as the "stopping the clock" that applied during the strike no longer holds. Congestion over the next several weeks will only compound the situation.

Many carriers have also announced disruption surcharges, expected to come into effect by mid-October. However, it's worth noting that carriers often announce such fees but rarely communicate when they are rescinded. Shippers should not be surprised if these surcharges do not fully materialize. Businesses are advised to review shipping contracts, particularly force majeure clauses, to understand better how surcharges and additional costs may apply.

Global Disruptions Ripple Across Markets

While the strike has concluded, its after effects will likely be felt globally. A temporary reduction in export capacity from Europe is expected in about two weeks, which could apply upward pressure on freight rates. This pattern may also play out in other regions with a longer lag. The global logistics network will take time to normalize, and rates are expected to remain volatile.

Air Freight Surge as Shippers Seek Alternatives

With ocean freight options constrained, demand for air freight has skyrocketed, driving rates higher. Time-sensitive shipments are particularly affected, with shippers facing increased costs as air freight capacity tightens. Businesses relying on urgent deliveries should prepare for continued cost increases in the near future.

JAS Worldwide: Here to Support You

In these challenging times, JAS Worldwide remains dedicated to supporting your business. Our teams are actively monitoring the situation and delivering customized solutions to minimize disruptions. Whether you need air freight alternatives, rerouting options, or expert logistics advice, JAS Worldwide is ready to help you navigate these complexities. Reach out to your JAS representative today to develop a strategic plan that ensures your supply chain remains resilient and efficient.