The ILA port worker strike, which concluded on October 3rd after the union accepted a 62% wage increase over six years, has ended. The agreement also includes an extension of the expired contract until January 15th to address unresolved issues, notably the role of port automation. The cessation of the strike allowed ports to resume operations on Friday, following a three-day halt that resulted in a significant backlog of containers and around 50 vessels waiting at anchor across East Coast and Gulf ports.
Industry experts predict that the three-day backlog may take up to three weeks to clear, although Port Authority officials in New York anticipate a quicker return to normalcy, comparing the situation to disruptions caused by winter storms. In the meantime, ocean freight rates, which had been declining prior to the strike, continued to drop during the shutdown. These rates fell more than 30% from July highs and are expected to keep declining post-strike, influenced by the seasonal decrease in demand leading up to Lunar New Year.
Ocean carriers had introduced surcharges in anticipation of the strike, ranging from US$1,000/FEU to US$4,500/FEU, which have now been suspended. Despite the strike-induced congestion on the East Coast potentially slowing the rate decline, the market's capacity absorption through Red Sea diversions is likely to prevent rates from falling below April's levels.
The strike also impacted air cargo, with some volumes shifting from ocean to air, leading to increased rates on certain lanes. The Freightos Air Index data indicates a 4% rise in Europe – N. America air cargo rates since early September, and a significant jump in China – N. America rates from US$5.91/kg to US$7.07/kg once the strike commenced. Additionally, Dubai – N. America rates have seen a 30% increase, possibly reflecting a shift to sea-air freight due to the strike.
Source: Container News