SHIPPING: Trucks, container ships backing up as US ports strike marks third day

HOUSTON (ICIS)–In only its third day, a strike by dock workers at US Gulf and East Coast ports is leading to idled trucks and growing numbers of container ships queuing outside of the ports.

TRUCKING
A trucking trade group, the American Trucking Associations (ATA), said that the strike has stopped all activity at five of the nation’s top 10 container ports and estimates that more than 60 container ships carrying nearly 500,000 containers scheduled for October delivery are now stuck in limbo.

The ATA said there are 30,000 truckers registered to work just at the port of New York and New Jersey, which sees about 12,000 truck visits in a typical day.

“Tens of thousands of more up and down the coasts are now sidelined by this strike,” the ATA said.

The ATA said that the trucking industry is made up of small businesses with more than 95% of carriers operating 10 trucks or fewer.

Todd Spencer, president of the Owner-Operator Independent Drivers Association, said American consumers will suffer the longer the strike goes on, but that independent drivers will also feel the pain.

“The longer this labor strike drags out, the more harm is done to American consumers who rely on the trucking industry to deliver the goods they depend on,” Spencer said. “We encourage a quick resolution to this latest dispute and emphasize the need for specific discussions about how supply chain deficiencies stifle driver compensation, increase loading and unloading delays, and hurt highway safety.”

CONTAINER SHIPS BACKING UP
Ships are also backing up outside of the affected ports, according to publicly available ship tracking services.

For example, there were about 51 vessels outside the entrance to Port Houston on 2 October, and about 65 vessels in the same area on 3 October.

Alan Murphy, CEO, Sea-Intelligence, said a prolonged strike will have an impact on global capacity as carriers currently have 62 deep sea services that call on East Coast and US Gulf ports.

Those vessels will have to wait at anchorage at the first port of call on their discharge schedule, Murphy said.

“In addition to that there are vessels which have already commenced their discharge rotation and will have to wait at their second, third, or even fourth port of call, depending on how much of their schedule they have already completed prior to the strike taking place,” Murphy said.

If the strike were to last four weeks, Murphy said that almost 7% of the global fleet will be tied up along the US East Coast, and the overall impact on the supply and demand equation will be very significant.

EXCESSIVE SURCHARGES
A chemical industry trade group, the Alliance for Chemical Distribution (ACD), sent a letter to US President Joe Biden criticizing excessive surcharges imposed by the carriers.

In the letter, ACD President and CEO Eric Byer highlighted the excessive surcharges imposed – and profits made – by ocean shippers who strangely had direct involvement in the failed negotiations.

“Neither side negotiated in good faith, effectively inviting a strike to take place,” Byer said. “For the ocean carriers, this is not surprising given the extreme profits they have been able to collect over recent years, putting them in a position to contentedly wait out a strike while the American economy loses billions of dollars a day.”

Byer said that the ocean carrier member companies of the United States Maritime Alliance (USMX) are levying a myriad of surcharges on shippers, ranging from hundreds of dollars to $3,000/container, citing labor disruptions as the cause.

“Through these surcharges, the ocean carriers are profiting from a crisis they played a direct role in creating,” Byer said.

STALLED NEGOTIATIONS
Meanwhile, the two sides are not currently negotiating.

The International Longshoremen’s Association (ILA) is representing the dock workers, and USMX is representing the ports.

USMX directors include representatives of major shipping lines, including Evergreen Shipping, Maersk, Hapag-Lloyd, Ocean Network Express, CMA/CGM, COSCO Shipping Lines, and Mediterranean Shipping Company (MSC).

USMX said it continues to focus on ratifying a new master contract.

“Reaching an agreement will require negotiating – and our full focus is on how to return to the table to further discuss these vital components, many of which are intertwined,” USMX said. “We cannot agree to preconditions to return to bargaining – but we remain committed to bargaining in good faith to address the ILA’s demands and USMX’s concerns.”

IMPACTS TO CHEM MARKETS
The strike is already affecting the US chemicals industry, with PE exports to Brazil being put on hold.

The polyvinyl chloride (PVC) Industry is concerned as all US Gulf PVC exports move out of one of the impacted East Coast ports.

In the polyethylene terephthalate (PET) market, imports of PET resins have already been diverted to the US West Coast in anticipation of the work stoppage.

Focus story by Adam Yanelli

Visit the ICIS Logistics – impact on chemicals and energy topic page