Pacific Cargo Armada Faces Uncertain Unloading
Unprecedented numbers of containers are sailing toward the west coast of North America just as labor disputes threaten to derail their smooth arrival. The Japan Maritime Centre reported outbound transpacific cargo movements hitting a six-month high in May, exceeding 1.5 million TEUs for the first time since October 2022. Moreover, Denmark’s eeSea confirmed that all boxships en route to the US and Canada are slated for arrival within the next 18 days.
Compounding matters further, US west coast ports are grappling with sporadic labor walkouts at terminals along the coastline. Additionally, union members are set to vote later this week on whether to proceed with a 72-hour strike at Canadian ports. Adil Ashiq, head of MarineTraffic’s operations in North America, emphasized the potential for significant supply chain disruption, commenting, “I can surely see a lot of vessels currently on their way from Asia to the USWC. The caterpillar effect will show and if things do not resolve in the coming days, then we may see some excitement in our supply chain once again.”
Warning Signs of Inland Congestion
Although there have yet to be reports of ships waiting for berth space at terminals, congestion is beginning to manifest inland. Railroad Union Pacific has temporarily suspended shipments from its inland terminals to three locations at the ports of Los Angeles and Long Beach, citing an accumulation of freight in container yards. Meanwhile, Oakland—which experienced the highest number of labor walkouts this past weekend—was further struck by tragedy when a crane operator perished while on duty.
Freight Market Impacts
Freightos Head of Research Judah Levine warned shippers that the ongoing stand-off between dock workers and employers could lead to an increase in spot freight rates. A major industrial action by the International Longshoremen Workers Union in early 2015 resulted in ship queues lasting several months. Though some improvements have been made since then, such as off-site overflow yards and better truck scheduling, an escalation in the labor dispute would likely still cause significant delays and recovery periods.
Role of the Biden Administration
The pay negotiations debacle between the ILWU and Pacific Maritime Association employers has persisted for over 13 months, increasing calls for the Biden administration to intervene. Container shipping consultant Andy Lane at Singapore-based CTI Consultancy stressed the need for new pay structures that reward workers for their labor without discouraging business.
