US dockworkers deal - supply chain Armageddon averted, for now
Warnings of severe supply chain disruption dissipated in the blink of an eye as the US East Coast dockworkers strike reached temporary resolution after just three days.
With the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) reaching tentative agreement on wages the strike at East and Gulf coast ports was called off. The two sides now have until 15 January next year to hammer out an agreement on other issues including the crucial area of automation.
Supply chain Armageddon on the East Coast has been delayed, for now at least, and with the strike lasting just three-days little impact will be felt.
Xeneta analyst Peter Sand, said he thought the backlog would be cleared within three weeks, and there has been little impact on rates, “We have seen no elevated rates [on the Atlantic] but there will be no fast drop-in rates either,” said Sand.
Rather than being Armageddon supply chain disruption effectively turned to Hollywood farce, akin to the comedian trying to lean against a car that has moved on, but Xeneta cautioned, the shift is just down the road a little, delaying the final show-down rather than eradicating it.
“We will be watching the pace of work at the ports in the next 100 days,” said Sand, though he added, “it is possible that the new president could invoke the Taft-Hartley rule which will give an 80-day cooling off period, and will allow more time for an agreement to be made before further strikes.”
For Sand the likelihood of an agreement being reached on automation within the given timeframe is slim, given that the two parties have failed to reach a deal on the issues around automation in the last year.
Moreover, Sand argues, “The most powerful tool in the ILA’s toolbox is the go-slow or work to rule,” that is not striking, but making sure that all rules are followed to the letter slowing the pace of work to unacceptable levels.
According to Xeneta the current backlog in freight should take around three weeks to clear about 44 ships waiting at anchor, though this will be slowed with around 120 ships arriving as the backlog is processed.
“New tonnage could plug the gaps in USEC services if schedules are disrupted,” explained Sand, adding, “At the moment the Pacific has seen the biggest deployment of new tonnage, but I expect new ships to be spread around to the regions where they are most needed.”
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