Carriers Grow Pessimistic Urging Preparations for U.S. Port Strike

With the deadline looming for the expiration of the master contract for U.S. East and Gulf Coast dockworkers, carriers are beginning to sound cautions to customers. Maersk, Hapag-Lloyd, and CMA CGM Group each issued customer advisories warning the situation is “dynamic” and with no signs of an agreement and the union saying they are at an impasse, the dangers are growing.

The employers represented by the U.S. Maritime Alliance (USMX) and the International Longshoremen’s Association ended the October 2024 walkout by extending the contract deadline to January 15, 2025. This week marked four weeks till the end of the extension and the anticipated January 16 work stoppage.

“The possibility of a strike increases each day that passes without a settled contract,” Maersk writes in a customer advisory released today, December 20. They said they await further developments but also noted the situation is complicated by the beginning of the holiday season.

Similarly, Hapag-Lloyd also issued an update echoing the same sentiments. It tells customers “the risk of disruption is increasing.” They also however acknowledge the situation remains dynamic.

The ILA and USMX have been silent for a week after trading jabs and blame last week for the current impasse. The ILA remains dug in on its position of no automation of semi-automation and seems emboldened by the strong support of President-elect Donald Trump. His nominated labor secretary, Oregon Representative Lori Chavez-DeRemer is also seen to be a supporter of labor unions.

With the deadline fast approaching, the Alliance for Chemical Distribution (ACD) sent a letter on Thursday, December 19, to both sides urging them to postpone the deadline. They ask for additional time for negotiations noting the start of the Lunar New Year on January 29 which traditionally causes a rush to get shipments done before the pause in much of Asia. Further, they note the timing of the U.S. presidential inauguration on January 20 saying time is needed for the transition. 

“We are concerned that a second lapse in contracts, complicated by the challenging timing issues of the presidential administration transition and the Lunar New Year, would cause irreparable harm to the U.S. economy and the American public,” writes Eric Byer, President and CEO of ACD. He says the three-day strike in October caused weeks of supply chain disruptions and if the strike had gone a few more days members would have lost stock of chemicals used for critical processes, such as water treatment.

Port executives, especially on the U.S. West Coast, highlighted strong volumes in November and an expectation of very strong volumes through the end of 2024. They believe that shippers are diverting cargo to the West Coast and frontloading to prepare for a possible strike and future tariff increases from the new administration.

For now, the carriers are telling customers to make preparations to move containers off terminal. Maersk notes it is unclear if the terminals will increase their hours to support extra movements. Similarly, Hapag advises customers to expedite the readiness of documentation and customs clearance to facilitate prompt retrieval of containers.

“Contingency plans to ensure that all impacted vessels and that operations are completed prior to any labor disruptions,” are being made CMA CGM advises. 

Carriers have traditionally held vessels offshore in an attempt to wait out a strike, but experts warn this could become a prolonged dispute. With the support of the incoming administration and likely pressure from shippers, experts believe the union may be in a stronger position in the final weeks before the contract deadline.