Strike Impact: U.S. Retailers Brace for Disruptions at Container Ports Ahead of Peak Season

U.S. retailers are concerned about disruptions at West Coast container ports during worker contract negotiations, which have previously led to shifts towards air freight. The National Retail Federation (NRF) this week urged President Joe Biden to intervene in negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA), which have failed to reach and ratify a new labor agreement after over a year of talks. Meanwhile, recent reports have highlighted strikes at major U.S. container ports, with accusations that unions are holding back labor. NRF's Senior Vice President for Government Relations, David French, stated: "Thousands of retailers and other businesses rely daily on the smooth and efficient operation of ports to get goods to consumers." He added, "As we enter the holiday shipping season, these additional disruptions will force retailers and other vital shipping partners to continue diverting goods from West Coast ports until a new labor contract is established." He emphasized, "All parties must return to the negotiating table. We urge government mediation to ensure swift resolution of a new contract without further disruption." Freight forwarding giant DSV issued a statement yesterday warning customers of potential impacts, noting actions at ports including Los Angeles, Oakland, Seattle, and Tacoma. Ports in Los Angeles and Long Beach are particularly affected. Judah Levine, Research Director at freight rate portal Freightos, indicated that TTI, the largest container terminal in Long Beach, was closed last week and reopened late Monday. However, he noted closures at other Long Beach terminals and disruptions elsewhere that continued through yesterday. Levine said, "Extended actions will severely impact truckers' ability to handle container loading and unloading, leading to delays for export containers and increased storage fees for import containers already in container yards or unloaded during economic slowdowns." He added, "They will also cause delays and congestion for ships waiting to dock—constraining capacity, putting upward pressure on freight rates—and could lead to container pile-ups in container yards, further impacting truck transport." In 2015, a two-week industrial action at U.S. West Coast ports saw a surge in air freight demand as shippers sought to compensate for delayed goods. It took about six weeks to clear the backlog of goods at ports. Thomas Cullen, Head of Transport Intelligence at consulting firm Thomas Cullen, suggested that the current impact might not be as significant. He pointed out that shippers have been diverting cargo from West Coast ports to other terminals, particularly feasible ones on the U.S. East Coast, over the past few months. Cullen said, "The threat of a full-scale strike on the U.S. West Coast seems unlikely, especially given the political pressure the union faces and its appeal to the President."