financetom
Business
financetom
/
Business
/
Shippers scramble for workarounds ahead of threatened US port strike
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Shippers scramble for workarounds ahead of threatened US port strike
Sep 26, 2024 10:50 AM

LOS ANGELES/NEW YORK (Reuters) - U.S. companies that rely on East and Gulf Coast seaports have been importing early, shifting goods to the West Coast, and even putting cargo on pricey flights to hedge against a threatened Oct. 1 strike that could jam supply chains and reignite inflation ahead of the U.S. presidential election.  

"This is just another headache after everything else we've been dealing with," said Kenneth Sanchez, CEO of Chesapeake Specialty Products, which sends goods like metallic abrasives and foundry sand additives used to make engine blocks and transmissions to customers around the world. 

His main port is in Baltimore, one of three dozen covered by an expiring contract between the International Longshoremen's Association (ILA) union representing 45,000 port workers and the United States Maritime Alliance employer group, whose renewal talks are at an impasse over pay.

The threatened walkout would come just five weeks before a presidential election between Democratic Vice President Kamala Harris and Republican former President Donald Trump that is likely to turn on pocketbook issues.

A prolonged strike, alongside an ongoing strike by 30,000 machinists at Boeing that has already started to ripple through the aircraft maker's supplier network, could put a dent in the U.S. job market next month at a critical moment. Economists at Oxford Economics last week estimated the two labor actions could reduce payrolls growth by 100,000 jobs if they stretch into mid-October.

   For Sanchez, it would be the second big supply chain setback after a bridge collapse cut off most access to the Baltimore port from late March through mid-June.

"Things were just starting to get back to normal," he said. 

   Now, he is working on a plan to put shipments on trains to West Coast ports - should the ILA's members go on a prolonged strike at ports that stretch from Maine to Texas and handle about half of U.S. ocean trade. 

German chain saw manufacturer STIHL said it is also developing contingency plans to keep exports flowing from its factory near the Port of Virginia, but didn't elaborate. STIHL's U.S. plant ships products to over 80 countries. 

Retailers, manufacturers and other importers, meanwhile, have been rushing in apparel, home goods, machine parts and other items ahead of the strike deadline to avoid having cargo stuck.

That sent U.S. imports to multi-year highs in July and August - exacerbating a shipping price increase tied to rerouting vessels around Africa to avoid rebel attacks on ships near the key Suez Canal trade shortcut.

Ronnie Robinson, chief supply chain officer at DSW parent company Designer Brands, normally routes about 20% of the company's shoe imports through the East Coast. He shifted about half of those goods to the West Coast. And, he paid ten times more than a typical ocean transit to fly in a small shipment of leather boots and dress shoes from Brazil.

"People are paying whatever they can to make sure they're in the front of the queue," said Robinson, who added his company cannot risk late deliveries to clients like Macy's, Nordstrom and Dillard's department stores.

Still, Robinson has 10,000 to 20,000 units in transit via East Coast-bound ships "that we're worried about".

STRANDED CARGO, SOARING RATES

As of Saturday, there were 42 container ships scheduled to arrive at the Port of New York and New Jersey, one of the biggest ports involved in the labor dispute, according to S&P Global's maritime tracking service Sea-web. Thirteen of the ships are scheduled to arrive after Sept. 30.

In August, the five largest ports on the East and Gulf Coasts processed about 24,766 40-foot containers of imports and exports valued at $2.7 billion each day, according to John McCown, senior fellow at the Center for Maritime Strategy.

Incoming wine and auto parts from Europe are vulnerable. Rerouting those goods to the West Coast is challenging because it could require difficult-to find transit through the Panama Canal, air freight or other time-consuming or costly measures, logistics experts said.

Ports on the East and Gulf Coasts also handle roughly 75% of the bananas that enter the United States, according to Jason Miller, interim chair of Michigan State University's department of supply chain management. He added that it doesn't make financial sense to reroute or fly in such low-value perishables.

The cost to send a 40-foot container from Shanghai to New York jumped to around $10,000 in July. Rates have since retreated, but could spike again with a strike.

"If the cost of shipping goes up ... it gets pushed onto the end consumer - whether that's someone buying a car or someone buying a metal part in a hardware store," Chesapeake's Sanchez said.  

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Global energy investment set to hit record $3.3 trillion in 2025, IEA says
Global energy investment set to hit record $3.3 trillion in 2025, IEA says
Jun 4, 2025
PARIS (Reuters) -A surge in clean energy spending is expected to drive a record $3.3 trillion (2.89 trillion euros) in global energy investment in 2025, despite economic uncertainty and geopolitical tensions, the International Energy Agency (IEA) said on Thursday. Clean energy technologies, including renewables, nuclear, and energy storage, are set to attract $2.2 trillion in investment, twice the amount expected...
China increases scrutiny of rare earth magnets with new tracking system
China increases scrutiny of rare earth magnets with new tracking system
Jun 4, 2025
(Corrects paragraph 5 to say implementation instead of mention) BEIJING (Reuters) -China has introduced a tracking system for its rare earth magnet sector, three sources said, as its export restrictions on them begin to cut off customers around the world. The national tracking system, which went into effect last week, requires producers to submit extra information online including trading volumes...
Google agrees $36 million fine for anti-competitive deals with Australia telcos
Google agrees $36 million fine for anti-competitive deals with Australia telcos
Aug 17, 2025
SYDNEY, Aug 18 (Reuters) - Google agreed on Monday to pay a A$55 million ($35.8 million) fine in Australia after the consumer watchdog found it had hurt competition by paying the country's two largest telcos to pre-install its search application on Android phones, excluding rival search engines. The fine extends a bumpy period for the Alphabet-owned internet giant in Australia,...
Shein hit with complaint from EU consumer group over 'dark patterns'
Shein hit with complaint from EU consumer group over 'dark patterns'
Jun 4, 2025
LONDON (Reuters) -Pan-European consumers organisation BEUC filed a complaint with the European Commission on Thursday against online fast-fashion retailer Shein over its use of dark patterns, tactics designed to make people buy more on its app and website. Pop-ups urging customers not to leave the app or risk losing promotions, countdown timers that create time pressure to complete a purchase,...
Copyright 2023-2026 - www.financetom.com All Rights Reserved