ALERTS & ​ADVISORIES

Negotiations Stall Between ILA and USMX: Urgent Impact on Your Business

By
September 30, 2024
Negotiations Stall Between ILA and USMX: Urgent Impact on Your Business
Negotiations Stall Between ILA and USMX: Urgent Impact on Your Business

With key issues such as wages and automation unresolved, talks between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) have broken down. If no agreement is reached by September 30, 2024, the ILA plans to initiate a strike on October 1, 2024, which will have significant consequences for businesses relying on U.S. East and Gulf Coast ports.

What This Means for Your Business:

The ILA represents workers at major U.S. container ports, and a strike could result in:

  • A halt to container operations at over half of U.S. ports.
  • Major delays at East and Gulf Coast entry points.
  • Prolonged transit times and rerouted vessels, leading to increased shipping costs.
  • Cargo stranded at ports, triggering costly storage and detention fees.
  • A ripple effect across industries during the peak season, from importers to retailers.
  • Heightened global shipping congestion and elevated freight rates.

Key Updates:

  • Vessel Rerouting: Hapag-Lloyd and ONE have already adjusted operations, rerouting 11 vessels to alternative ports. For example, "Alessia" (AN2 service) will offload Houston and New Orleans-bound cargo in Cartagena, Colombia, while "Tempanos" (ANG service) will discharge similar cargo in Altamira, Mexico, on October 1. ONE plans to return the cargo to the U.S. once the strike ends.
  • Updated Surcharges: ONE has announced updated strike-related surcharges: CGD (except China) at $2,000/40' and CON (China) at $1,000/40', reflecting different regulatory requirements. MSC has also introduced a $3,000/40' Emergency Operation Surcharge (EOS) from China, Japan, Korea, and Southeast Asia, effective October 27.
  • Reefer Cargo: MSC will continue accepting dry container bookings into USEC and USGC but reserves the right to reject reefer bookings and will not assume liability for those left in strike-affected terminals.

Recommendations for Shippers:

  • Prepare for West Coast Congestion: As many shippers reroute to West Coast ports, anticipate longer wait times, increased fees, and congestion.
  • Expect Delays: In-transit cargo bound for East and Gulf Coast ports will face docking delays, with backlogs persisting even after a strike ends.
  • Consider Air Freight: For time-sensitive shipments, air freight remains the fastest alternative. JAS offers multiple air cargo solutions.
  • Plan for Higher Costs: Shipping rates will rise due to increased demand, while delays will lead to higher demurrage, detention, and storage fees.
  • Review Incoterms: Ensure clarity on financial responsibilities for delays and fees as determined by Incoterms. Be prepared to manage rerouting and storage costs.

To mitigate potential disruption, JAS has contingency plans ready. We recommend exploring alternative logistics solutions, such as air freight for high-priority shipments and can assist with rerouting options. Contact your JAS representative to discuss tailored strategies for keeping your cargo moving smoothly amid these challenges.

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