Updated November 1, 2024:

With the January 15 deadline for a new master contract approaching, another potential ILA strike is looming yet again, potentially causing massive disruptions at ports along the U.S. East and Gulf Coasts.

On October 25, the union and the United States Maritime Alliance (USMX) released a joint statement announcing that they will resume talks in November. The two parties will meet in person in New Jersey to address remaining issues, including port automation.

A tentative agreement was reached in early October, ending a three-day strike.

Updated October 9, 2024

On a separate note, we’re closely monitoring the development of Hurricane Milton in Florida. On Wednesday morning (October 9), the storm was downgraded to a Category 4 and is expected to make landfall on Florida’s West Gulf Coast later today as a Category 3 storm, with winds reaching 111 to 129 mph (180 to 210 kph).

On October 8, the Port of Tampa issued a notice calling off inbound and outbound vessel traffic. The Port of Jacksonville will be closed from 10 a.m. on Wednesday, October 9, to Thursday, October 10. It is scheduled to reopen on Friday morning. The Port of Miami remains open as of October 8, but vessel movement will be restricted starting at midnight.

Updated October 7, 2024

Following last week’s three-day ILA strike, the issue of automation remains a significant concern before the two parties—the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX)—return to the negotiation table on January 15, 2025.

In a statement released on October 7, the ILA addressed several key issues that led to last week’s massive strike. While the union hailed the 61.5% wage increase over the next six years as “unprecedented,” it stressed that the fight against automation is not just about protecting jobs, but about "ensuring that ILA members continue to play an essential role in port operations."

“By extending negotiations, we aim to establish strong protections against the introduction of remote-controlled or fully automated machinery that threatens our work jurisdiction,” said the ILA.

In response to the suspension of the strike, several major ocean carriers, including MSC, CMA, Maersk, and ZIM, have removed strike-related surcharges. However, additional charges may still arise due to trucker and equipment shortages, as well as other market factors.

Updated October 4, 2024

After being closed for three days due to the ILA strike, some U.S. East and Gulf Coast ports, like Port of Houston, Port of Savannah, and Port of Virginia, have slowly resumed operations today (Friday).

Meanwhile, shippers are still able to schedule and reserve space for their cargo shipments to U.S. East Coast (USEC) ports, just as they could during the strike, said Kyle Beaulieu, Senior Director, Head of Ocean Americas at Flexport. However, he pointed out that there were some disruptions specifically with cargo being routed via rail from Los Angeles (LA) to the East Coast.

“Rail services along this route were limited, but these rail operations are expected to resume soon,” he said.

For urgent cargo, he recommended routing through the West Coast using rail or transloading in Los Angeles to avoid potential cargo congestion at USEC ports.

Thomas Kempf, Senior Director, Global Airfreight Development at Flexport, noted that the strike had minimal impact on air freight. However, some shippers shifted to air freight to avoid delays, which caused a temporary surge in demand for air cargo services, particularly from the Middle East and South Asia.

Kempf added that demand will eventually stabilize as "those few shippers revert back to ocean freight for more cost-effective transportation." In the long term, he highlighted that the strike could have lasting effects, prompting some shippers to diversify their logistics strategies and rely more on air freight to mitigate future disruptions. To learn more about air freight market trends for 2025 and beyond, check out our blog.

Updated October 3, 2024

The International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) have reached a tentative wage agreement and extended the Master Contract – effectively ending the strike.

The ILA and USMX issued a joint statement on Thursday, October 3 on the International Longshoremen’s Association Facebook Page:

“Joint Statement Regarding Master Contract
The International Longshoremen’s Association and the United States Maritime Alliance, Ltd. have reached a tentative agreement on wages and have agreed to extend the Master Contract until January 15, 2025 to return to the bargaining table to negotiate all other outstanding issues. Effective immediately, all current job actions will cease and all work covered by the Master Contract will resume.”

Stay informed about the latest developments by tuning into Flexport’s North America Freight Market Update Live on Thursday, October 10.

Updated October 3, 2024

According to the Shanghai Containerized Freight Index (SCFI), average spot rates from Shanghai to the U.S. East Coast were $5,626 per FEU for the week ending September 27, marking a 43% decline from their peak on July 5 and reaching their lowest level since early May. Nerijus Poskus, VP of Global Ocean Procurement at Flexport, informed Lloyd’s List that actual rates are even lower than the indexes indicate.

"The current ocean market continues softening, and we’re still seeing opportunities for special spot deals to both the East and West Coasts that can be significantly lower than the indexes suggest—sometimes even thousands less on select sailings and select origins," he said. "There is a large gap between the cheapest carrier and a market average today, and there’s no one-size-fits-all approach for shippers."

While current negotiations between the ILA and USMX remain at an impasse, USMX stated on October 2 that it “cannot agree to preconditions to return to bargaining, but remains committed to bargaining in good faith to address the ILA’s demands and USMX’s concerns.”

On October 3, Florida Gov. Ron DeSantis announced a series of measures on X aimed at minimizing the impact of the strike. One of these measures includes deploying the Florida National Guard to key ports—Port Everglades, Port Miami, Port Tampa Bay, and JaxPort (Jacksonville Port) — to "maintain order and, where possible, resume operations."

“Disrupting the distribution of food, equipment, and supplies as the Southeast U.S. recovers from Hurricane Helene is unacceptable. Floridians need a reliable, steady supply of resources and building materials to keep their families fed and rebuild their homes and businesses,” he said.

In his post, he also said that the Florida Highway Patrol will manage traffic flow at all seaports across the state as needed to expedite the movement of goods delayed by the strike. The governor also directed the Florida Department of Transportation to waive tolls, fees, and size and weight restrictions for commercial vehicles to accelerate the transportation of goods and lower operational costs.

Updated October 1, 2024

The International Longshoremen’s Association (ILA) has officially launched a coast-wide strike, shutting down all ports from Maine to Texas. This action follows the rejection of the United States Maritime Alliance’s final proposal, marking the first ILA strike in nearly 50 years.

The ILA is seeking a $5-an-hour pay raise for each year of the new six-year contract, which would amount to a 77% pay increase over the new contract’s duration. Under the previous contract, which expired on September 30, members earned up to $39 per hour, or approximately $81,000 annually. In addition to the wage increase, the union is firm in its opposition to automation. “We want absolute airtight language that there will be no automation or semi-automation,” said ILA President Harold Daggett on Tuesday.

President Joe Biden released a statement the same day, urging the USMX “to present a fair offer to the workers.” He added, “It’s time for USMX to negotiate a fair contract with the longshoremen that reflects the substantial contribution they’ve been making to our economic comeback.”

“The USMX brought on this strike when they decided to hold firm to foreign-owned ocean carriers earning billion-dollar profits at United States ports, but not compensate the American ILA longshore workers who perform the labor that brings them their wealth,” said Daggett. “We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve.”

Other updates, including the latest on various modes of transport:

Cargo Diversions: The ILWU previously stated that it will not unload any East-Coast-bound vessels. That said, those vessels are not diverting to the West Coast anyway (this does not make economic sense), so we expect vessels to be anchored offshore along the East and Gulf Coasts. The only diversions we have seen—and should continue to see in the short term—are along the East Coast, as shipping companies are omitting certain port calls, or dropping cargo in-transit until the East Coast reopens, as some shipping companies have started to do in Central America ports. It’s worth noting that we already saw an increase in volumes at the Ports of Los Angeles and Long Beach earlier this year, as shippers started shifting some cargo to the West Coast in anticipation of a strike.

Rail: Last week, railroad companies stated they were prepared for a strike. However, multiple carriers have stopped accepting interior point intermodal (IPI) cargo traveling from the West Coast to the East Coast, and several rail depots across the East and Gulf Coasts are fully closed. BNSF—the largest freight railroad in the U.S.—has noted that "due to ongoing labor discussions, CSX and Norfolk Southern Railway (NS) have announced embargoes affecting some East Coast ports." Should the strike go on, it’s likely railroads will experience extreme backlogs, with a massive decrease in capacity and a surge in rail dwell and transit times.

Trucking/Drayage: The trucking community on the East Coast is bracing for high levels of congestion based on imminent vessel bunching, chassis shortages, and terminal pickup and empty return appointment availability. West Coast market conditions will be contingent upon how clogged the railroads get, and how many importers begin to shift new bookings for transloading and trucking to the East Coast. While FTL capacity in itself will not be an issue, if many businesses turn to transloading, rates will skyrocket (remember, during the peak of Covid the trucking spot market rose as much as 50%+).

Air: Should a strike last for one week, air freight costs will likely rise in mid-October and may last until the end of November. If the strike continues into next week, then rates could continue to spike until the end of the year, with November rate levels comparable to what we saw at the peak of the pandemic.

Updated September 30, 2024

With less than eight hours before a potential ILA work stoppage that could rattle the U.S. supply chain, the United States Maritime Alliance (USMX) issued a memo providing the latest updates on its negotiation with International Longshoremen's Association (ILA) as of September 30.

According to the memo, the USMX and ILA have been exchanging counteroffers related to wages over the past 24 hours. USMX’s proposal includes a nearly 50 percent wage increase, tripling employer contributions to employee retirement plans, enhanced healthcare options, and maintaining the current terms on automations and semi-automation.

“We’re hopeful that this could allow us to fully resume collective bargaining around the other outstanding issues — in an effort to reach an agreement,” the memo states.

Earlier today and separately, approximately 350 dockworkers represented by a local union affiliated with the Canadian Union of Public Employees (CUPE) Local 375 have begun a three-day work stoppage, which began at 7 a.m. ET today (09/30) at the Port of Montreal.

The port confirmed on X that two Termont-operated terminals affected by the work stoppage—Viau and Maisonneuve —will remain closed until 6:59 a.m. on Thursday, October 3.

Negotiations between the union and the Maritime Employers Association (MEA) broke down over a new contract, primarily over demand for higher wages.

The two closed terminals accounted for about 40% of the port’s container traffic. The Port of Montreal is the largest container port in Eastern Canada, handling a total volume of 35.3 million tonnes of goods last year.

Updated September 29, 2024

Dockworkers represented by the International Longshoremen's Association (ILA) are set to go on strike along the U.S. East and Gulf Coast ports starting 12:01 am Tuesday on October 1, the union said on Sunday. No location of a potential work stoppage has been released yet.

“ILA unity remains strong and is growing,” the union reaffirmed in the statement, accusing the United States Maritime Alliance (USMX), which represents employers of the East and Gulf Coast longshore employers, of refusing to “address a half-century of wage subjugation.”

The USMX did not comment immediately.

Updated September 27, 2024:

Just three days before a potential strike that could shut down U.S. East and Gulf Coast ports, disputes between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) have escalated.

On September 26, the USMX filed an unfair labor practice charge against the ILA with the National Labor Relations Board (NLRB), seeking “immediate injunctive relief” to bring thousands of dockworkers back to the negotiation table.

In response, the ILA called the act a “weak publicity campaign designed to fool the American public.” According to the union, filing these charges four days before the current contract’s expiration date shows “what poor negotiating partners [the USMX has] been.”

“If it wasn’t for the ILA engaging in serious and productive negotiations, most of the local agreements would not have been settled over the past year,” the ILA said.

Meanwhile, several carriers, including ONE and Yang Ming, are invoking force majeure clauses, which relieves parties from their contractual obligations due to uncontrollable events such as pandemics, natural disasters, and strikes. Carriers are already omitting certain East Coast ports and discharging cargo either at prior ports or next ports.

Updated September 25, 2024:

More U.S. East and Gulf Coast ports are extending their operating hours in anticipation of a potential ILA work stoppage on October 1 as part of their contingency plans.

The Port of Virginia announced that they will halt cargo operations starting September 30, 2024, with the last inbound train delivery cut-off deadline at 8 a.m. It is strongly advised that all truckers submit any reservations into the Trucker Reservation System by 5 a.m. Additionally, all in-bound truck gates will close at noon. At 1 p.m., all ocean operations will cease, meaning that all vessels must set sail and the last outbound train will depart. All reefer units will remain connected to power during the potential work stoppage but will not be actively monitored.

The Port of New Orleans has announced that it will implement additional operation hours Saturday (September 28) from 8 a.m. to 5 p.m., with a one-hour break from noon to 1 p.m. On September 30, the port will cease vessel operations starting from noon and rail operations from 4 p.m.

To help their customers navigate looming supply chain disruptions caused by the potential work stoppage, more shipping companies have been actively advising their customers to implement contingency measures. For example, multiple carriers, including ONE, Hapag-Lloyd, and others, have announced port omissions and cargo discharges at alternate ports along the U.S. East and Gulf coast. Additionally, bookings for export of dangerous goods (DG) and reefer cargo have also been restricted.

Meanwhile, railroads (including CSX Transportation, Canadian National Railway, and Norfolk Southern Railway) have set cut-off deadlines for exporters to drop off their containers.

Updated September 23, 2024:

Key highlights:

• The USMX announced on Monday that it has received outreach from the Department of Labor, the Federal Mediation & Conciliation Service (FMCS), and other federal agencies. The USMX also said that no negotiations are currently taking place.
• CMA CGM has stopped accepting Interior Point Intermodal (IPI) cargo to the U.S. East Coast ports. As an alternative, shippers can offload at U.S. West Coast ports and transport cargo to the East Coast via rail.
• ONE announced that it will skip Norfolk and discharge all cargo in Charleston, South Carolina.
• No more exports from rail hubs to East Coast or Gulf Coast ports.

With a potential work stoppage looking increasingly unavoidable, multiple U.S. ports are implementing contingency plans.

Port of New York-New Jersey:

• APM Terminals' Port Elizabeth, the largest terminal on the East Coast, has announced extended gate hours (until 7 PM) through Sept. 27, with additional gates open on Sept. 28. Normal operating hours (6 AM–4 PM) will resume on Sept. 30.
• Empty and out-of-gauge (OOG) operations will continue as usual, though OOG containers will not be serviced on Sept. 28. Export and import appointments will proceed as scheduled through Sept. 30, except live reefers, which will not be accepted on that day.
• Maher Terminals, the operator of the largest container terminal at the Port of New York and New Jersey, announced it will extend its truck gate two hours later until 9 p.m. for the week of Sept. 23.
• Currently, 36 container ships with a combined capacity of 273,000 TEUs are destined for New York-New Jersey, with 10 of those ships expected to arrive after Sept. 30.

Port of Houston:

• The port announced that container terminals will receive export cargo through Monday, September 30th. They plan to work vessels and keep gates open until 7 p.m.
• Any containers remaining in the yard after 7 p.m. on September 30, 2024 will be unavailable until the work stoppage concludes. On days when container terminal gates are closed, storage fees to the line and the Import Dwell Fee will not apply.

Georgia Ports: Garden City Terminal at the Port of Savannah:

• Normal Gate Hours: Monday-Friday, 4:00 a.m. – 6:00 p.m.
• Weekend operations (September 28 and 29) : Gates open from 8:00 a.m. – 5:00 p.m.
• Reefer services available for imports, exports, and empties.

Ocean Terminal at the Port of Savannah:

• Normal Gate Hours: Monday-Friday, 8:00 a.m. – 12:00 p.m., 1:00 p.m. – 5:00 p.m. (closed for lunch from 12:00 p.m. – 1:00 p.m.).
• No weekend gate operations.

Ocean carriers have also announced key measures and cut-off dates ahead of a potential port work stoppage:

• Cut-offs for Export Containers: Refrigerated and hazardous export containers heading to East Coast ports will have cut-off dates. Freight at Chicago rail ramps bound for New York-New Jersey must be delivered by Friday, while intermodal freight bound for Savannah will be cut off on Monday.
• Export Bookings: Ocean Network Express (ONE) has paused new U.S. export bookings for refrigerated containers on vessels arriving after Sept. 30 but will continue accepting dry export containers. CMA-CGM has paused all new U.S. export rail intermodal bookings, effective 9/23. The booking pause will be in effect for all ports affected by potential work stoppage.
• Hapag-Lloyd: Will not charge detention on empty or export containers during the work stoppage, allowing empty containers to be delivered to off-dock depots.
• ONE: Will halt detention charges for export containers at coastal locations, but inland export containers will still accrue fees. Detention for empty containers will depend on depot availability.

Carriers with greater market share on the U.S. East Coast and Gulf Coast is likely to face more severe equipment availability issues within the next month. Here’s a breakdown of carriers that are likely to be most impacted in terms of percentage of total capacity deployed to the U.S. East Coast and Gulf Coast compared to their total capacity in the U.S.:

(Chart source: U.S. Customs manifest data, PIERS / Import Genius)

Here’s a breakdown of the trade lanes that will be most affected:

(Chart source: U.S. Customs manifest data, PIERS / Import Genius)

Updated September 18, 2024:

CMA CGM, one of the world's largest ocean carriers, recently announced new local port charges at destination that will go into effect on October 11 in the event of a work stoppage. These charges would affect 18 U.S. East Coast and Gulf Coast ports—including some of the busiest ports in North America.

Additionally, on September 17, a coalition of 177 national and state trade associations presented President Biden a letter requesting that the U.S. administration help the ILA and USMX "return to the bargaining table."

Soon after, the Biden Administration stated they do not intend to invoke the Taft-Hartley Act to break a potential work stoppage. (Per Taft-Hartley, U.S. presidents may break work stoppages by enforcing an 80-day cooling-off period, during which employees must return to work while negotiations resume.)

“We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now,” said a Biden Administration official.

Post Published September 12, 2024:

On September 5, delegates from the International Longshoremen’s Association (ILA), the largest union of maritime workers in North America, unanimously affirmed its President Harold Daggett’s call for an East Coast and Gulf Coast work stoppage beginning October 1, 2024, should the union and the United States Maritime Alliance (USMX) fail to finalize a new contract before the September 30 deadline.

The potential work stoppage creates tremendous risk for global supply chains—especially on the eve of a busy holiday season. Read on for Flexport’s breakdown—what we know, what’s at stake for U.S. supply chains, and our advice for Flexport customers.

What’s Happening?

The multi-month negotiations have escalated between two parties: the ILA, which represents 45,000 workers at major U.S. East Coast and Gulf Coast container ports, and the USMX, which represents employers across the area’s longshore industry (including carriers, marine terminal operators, and port associations).

Ongoing negotiations have centered around pay, marine terminal automation, and healthcare and retirement benefits.

Let’s break down the latest developments:

• The ILA and the USMX came to an impasse in June, after the ILA discovered that various ports had implemented automation technology that processes trucks without union workers’ labor. According to the ILA, such actions breached its existing contract with the USMX.
• Later, the International Longshore & Warehouse Union (ILWU)—which represents more than 23,000 dockworkers at U.S. West Coast ports—pledged support for the ILA in its negotiations, implying that the ILWU would likely not work vessels originally destined for the U.S. East Coast.
• In August, the ILA and the USMX each filed a notice with the Federal Mediation and Conciliation Service (FMCS), a U.S. government agency that provides arbitration assistance for labor disputes. There was no agreement concerning actual mediation.
• On September 4, 2024, ILA President President Harold Daggett published a speech outlining the union’s stance. “The ILA most definitely will hit the streets on October 1 … if we don’t get the contract we deserve,” he stated.

• If the ILA and the USMX do not finalize a new master contract by the end of the day on September 30, 2024—when ILA workers’ existing contracts expire—the union intends to proceed with a work stoppage at 12:01 a.m. on October 1.
• Shippers may have already factored in the potential work stoppage, with container volumes from Southeast Asia to North America hitting a record-breaking 500,000 TEUs in June, suggesting an early peak season. A segment of the market is diverting shipments to the U.S. West Coast, while others—namely, those with healthy inventory levels or less flexibility in cargo routing—are staying the course.

Source: PIERS

What Are the Implications for North American (and Global) Supply Chains?

An ILA work stoppage—should one persist for more than a few weeks—could upend North American supply chains, resulting in logistics bottlenecks that could surpass 2021-2022 backlogs. Consider the following:

• From September 2023 to August 2024, the U.S. East Coast and Gulf Coast ports handled approximately 54% of U.S. imports, according to data from PIERS. The U.S. East Coast and Gulf Coast are also home to five of the busiest ports in North America. After the ports of Los Angeles and Long Beach, the busiest ports in the U.S. are New York/New Jersey, Savannah, Virginia, Houston, and Charleston. The economic impact of a potential work stoppage could be massive: U.S. East Coast ports—all of which are covered by the ILA/USMX labor contract—would handle 2.3 million twenty-foot equivalent units (TEUs) in October. This freight would exceed $3.7 billion each day, based on MDS Transmodal's estimate of $50,000 per container.

Approximately 757 vessels and 4.6 million TEUs in total capacity are deployed on trades that call an East Coast or Gulf Coast port. Average vessel size is ~6000T. (Source: Alphaliner)

Source: PIERS

• In the event of an ILA work stoppage, the ILWU will likely take solidarity action. This could lead to wide-ranging impacts, including slowdowns at U.S. West Coast ports.
• Another likely outcome of the work stoppage: on the brink of the peak holiday season rush, businesses may begin to ship via air instead of ocean. Air freight prices will likely surge, while capacity will continue to tighten in an already-strained market.
• A one-day work stoppage by the ILA would take six whole days to recover from, according to Sea-Intelligence. And a one-week work stoppage in October—when millions of businesses prepare for the holiday rush—could lead to bottlenecks until mid-November.
• An even longer work stoppage may trigger pandemic-level disruptions. A massive influx of rerouted shipments would quickly overwhelm U.S. West Coast ports, resulting in container pile-ups and strained railroads. Shippers would face chassis shortages, skyrocketing trucking rates, potential General Rate Increases (GRIs), and additional detention and demurrage (D&D) and accessorial costs.
  • In 2015, for example, negotiations between the ILWU and 29 U.S. West Coast ports spanned nine months, leading to massive disruptions on the docks. It took several weeks to clear the backlog of cargo containers, and several months for freight traffic to normalize, even after the dispute was settled.
• The most important lesson of the 2021-2022 supply chain crisis was the unpredictability of bottlenecks around the world. And all those bottlenecks—with ships queuing at ports—were caused by a 20% increase in the number of containers being shipped.
• Another lesson from the pandemic-induced supply chain crisis: if ships that are currently en route to U.S. East Coast or Gulf Coast ports go out of rotation, the effective capacity of the world’s container shipping network would fall. All of the cargo that would’ve been carried by those ships at their port of call will be delayed. There won’t be containers where they’re needed, as they’ll be sitting on ships off the East and Gulf Coasts of the United States. In short, this could lead to container and other equipment shortages that may take months to resolve.
• A work stoppage could severely disrupt the intermodal market, with U.S.-East-Coast-destined containers flooding the railroads via U.S. West Coast rail gateways. Importers may seek to leverage the interior point intermodal (IPI) market as a means of shipping cargo eastbound into inland markets to avoid coastal ports.
  • During the pandemic, when rail volumes increased 15-20%, we saw rail congestion cause more than 3 weeks of dwell before loading onto trains. Rail transit times increased 3-4 times—from 3-5 days to as many as 13-15 days in core lanes.
  • In addition, customers may seek to terminate cargo at U.S. West Coast ports, transload, and truck via FTL to their final destination. As this was another highly leveraged solution during the pandemic, warehouses and cross-dock facilities were operating at 100%+ capacity, resulting in slower transload throughput and increased street dwell of chassis and containers.
  • Due to higher operating costs during the pandemic, drayage rates increased 20%+, with total spend rising as much as 80% due to increased accessorial exposure. Port congestion, driver wait times, and excess chassis and yard storage days could all become pervasive charges again. Full truckload spot rates increased as much as 56%, which, if repeated, would have material impact on transload outbound shipments.
• While no industry would be completely immune to disruptions from an ILA work stoppage, certain sectors would feel the impact more intensely. For industries that rely on just-in-time inventory systems—like automotive and pharmaceuticals—even a two-day strike could severely disrupt operations. A large portion of auto parts and components come through East Coast ports; production delays would pose significant risks.
• On the export side, shipments bound for Europe, Latin America, and the Indian subcontinent primarily depart from U.S. East Coast ports. A work stoppage would complicate operations for exporters in these trade lanes.

How Likely Is a Strike?

Statements from the ILA suggest that the union is far from reaching a deal with the USMX. In fact, negotiations are not presently taking place, according to a statement from the USMX. Based on public statements, it is unlikely that the ILA and the USMX will agree on the terms of a deal by the deadline unless negotiations quickly resume. It’s also possible that the current U.S. administration under President Biden could intervene to prevent a work stoppage in the middle of the upcoming presidential election.

Government intervention could take many forms. What’s most likely: the U.S. administration would step in to convince both sides to accept an extension for some period beyond the election. How long such an extension might last is anyone’s guess, but kicking the can down the road may prevent disruptions during the peak holiday shipping season. Even so, it’s fair to say that a mere extension of the current contract would not resolve the fundamental disputes between labor and management concerning hourly wages, healthcare costs, performance monitoring, and—most of all—the automation of ports.

Such intervention is not without precedent. Just last month, the Canadian government ordered arbitration between Canada’s two largest railways and the Teamsters union, reopening the country’s rail freight network a mere 16 hours after the lockout began. And since the passage of the Railway Labor Act in 1926, U.S. Congress has intervened in rail labor negotiations 18 times. These interventions include status quo extensions, binding arbitration, and specially appointed boards and panels.

Guidance for Flexport Customers

At Flexport, we’re closely monitoring developments and consistently sharing updates with all our clients to mitigate the impact of delays and additional cost exposure.

Our guidance is to run a scenario planning exercise with your key partners. A good scenario plan starts with an evaluation of your inventory levels, sales forecast, upcoming product launches and promotions, and inventory in transit. We recommend briefing your finance, sales, and marketing counterparts early and often.

Here are key decisions to make as a team:

• Review all your inventory in transit to East Coast and Gulf Coast ports, and perform a risk assessment. Your key decision is whether you should reorder critical SKUs and route them via the West Coast, or move them via air freight to diversify your risk.
• Decide if upcoming shipments traveling to Midwest and East Coast locations can be delayed until you have more information. Any decision made today is made with incomplete information, so if you have sufficient inventory, stay put.
• For shipments that cannot wait, decide whether you should book via East Coast and Gulf Coast ports, West Coast ports, or a blend of the two—and decide whether you want to use rail or transloads to get to your final delivery location.
• Decide if you want to book urgent cargo via air freight or premium fast boat services. This decision should be governed by your gross margins, current inventory levels, and the risk of lost sales.

We will continue to update this live blog with news and updates. This situation is changing fast, so your biggest advantage is preparation, adaptability, and clear decision-making. Flexport is here to help you navigate the risks.