After a three-day strike, the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) reached a tentative agreement on wages and temporarily suspended the strike. Both sides agreed to extend the contract until January 15th and return to the negotiation table to discuss additional benefits and automation.
Failure to reach an agreement could lead to another strike ahead of the Lunar New Year, which is on January 29th. Will shippers import extra inventory ahead of a potential strike on January 15th, similar to what they did before the September 30th expiration date of the ILA contract?
Indeed, shippers front-loaded a significant number of imports throughout 2024 leading up to the ILA’s three-day strike. But how will a potential January 15th strike and the resulting congestion compare to the October 1st strike?
In a recent Journal of Commerce story, Paul Bingham, director of transportation consulting for S&P Global Market Intelligence, said, “The degree of front-loading in 2024 may have been more than some analysts realized.” He added, “That might account for softness in import demand now and through the rest of the year.”
According to the National Retail Federation’s (NRF) October Port Tracker forecast:
However, all forecasts and expectations could be thrown out the window by mid-December if progress in negotiations between the ILA and USMX stalls, leading to routings shifting from East and Gulf Coast ports to West Coast ports.
A shift from East and Gulf Coast ports to West Coast ports could result in extra costs and increased transit times for shippers. The alternative for shippers would be to increase their inventory levels ahead of the potential January 15th deadline, allowing them to mitigate another port closure. However, moving purchase orders forward in significant numbers on short notice is unlikely, especially considering the pre-Chinese Lunar New Year rush of order fulfillment already happening in December.
Once again, shippers face another wave of uncertainty.
To succeed, shippers must prioritize flexibility in their logistics operations to navigate potential disruptions. Strengthening supplier partnerships and adding redundancies in the raw material supply chain can enhance responsiveness to black swan events. Clear communication with stakeholders—including freight forwarders, shipping lines, and customers—is crucial for aligning expectations and planning for potential volatility.
Negotiating flexible contract terms and space allocations can provide a safety net against price fluctuations or service disruptions. Additionally, investing in data analytics and forecasting tools will enable shippers to anticipate market shifts, assess risks, and make informed decisions, ultimately improving their resilience in uncertain market conditions.
By investing in technology tools like Ship Angel’s AI-driven Rate Management platform, shippers can add flexibility to their supply chain operations and be better prepared to make data-driven decisions more quickly. Managing freight rates, surcharge updates, and freight schedule verifications on a single platform streamlines operations and enhances decision-making in uncertain environments.
Ship Angel is a cutting-edge rate management platform for BCO shippers, offering innovative solutions in rate management, amendment guard, invoice auditing, and sustainability reporting. Powered by AI, Ship Angel helps shippers manage rates efficiently, ensure contract accuracy, and optimize cost savings. With a commitment to transparency, Ship Angel works across industries to help companies avoid costly disruptions and stay ahead in a rapidly evolving global trade environment.