Maritime 2025 Annual Review & Outlook
In Perspective
Strike dominoes
By Lars Jensen
A more protracted strike will lead to capacity shortages well into March , when demand tends to pick up again .
With the negotiations between the International Longshoremen ’ s Association ( ILA ) and the US Maritime Alliance being stalled for the past month , and with President-elect Donald Trump having voiced clear support for the ILA ’ s position , it is time to revisit the domino effects pertaining to a potential strike from Jan . 15 .
There are domino effects to be contemplated not only during a strike but also before and after .
The risk of a strike itself — irrespective of whether it happens or not — has already led to some US importers moving products earlier than they otherwise would have . But this effect is now tapering off as we are approaching a point of no return . For cargo from Asia to the US East Coast , the transit time is typically four to five weeks depending on routing with some slightly faster and some slightly slower . With the strike only four weeks away , this means there is no longer the option here to avoid the potential strike .
Rerouting the cargo via the US West Coast is still feasible , but with transit times of two to three weeks , this window is also rapidly closing . The same applies to cargo coming from South America and Europe , where the window for moving cargo before January 15th is coming to an end unless bookings are placed within a week .
A ripple effect on this is , of course , a larger pressure on warehousing than what would otherwise have been the case for cargo being frontloaded .
These were the dominoes which had already been toppling prior to the potential strike .
If the strike goes into effect , the immediate impact — as we also saw during the three-day strike in October — is that we will see vessels anchor up outside major US East and Gulf coast ports . We will also see some cargo discharged in alternate locations . In October , some cargo was discharged earlier than planned at US East Coast ports to get the cargo off the vessel before a strike , and some was discharged into regional hubs such as Freeport and Kingston . We are likely to see the same pattern unfold this time .
Then come the dominoes following the initial port closures . When vessels anchor up , this means they also do not return to their origins . This will lead to capacity declining in Europe with a lag time of two to three weeks and Asia with a lag time of four to five weeks . This effect was also seen following the
October strike , but given that the strike only lasted three days , the effect was relatively manageable . Should the strike last longer , this gives rise to significant drops in export vessel capacity on the headhaul trans-Atlantic trade in the first half of February , and in Asia this will impact export capacity toward the end of February .
If the strike is relatively short — say a week or so — the impact , especially in Asia , should be manageable as well . This will be at the tail-end of the seasonal downturn after Lunar New Year , but a more protracted strike will lead to capacity shortages well into March when demand tends to pick up again . A more protracted strike would furthermore impact the equipment availability in Asia , as during the strike there will be no repatriation of empty containers from the US East Coast back to Asia . This would then become a problem during March as well , but only if the strike is relatively protracted .
New networks , new risks
Another domino impact , which we did not have in October , is that this disruption hits right as the new alliance networks are to be phased in . This will result in significant operational disruptions to the networks , also beyond what can already be expected . Phasing in the new networks involves shuffling hundreds of vessels out of their current service rotations and into new ones , and those can also involve vessels being shuffled to or from US East Coast services . As such , there can be additional ripple effects on trades not directly calling strike-impacted ports at all .
A quick look at the volumes handled on the US East Coast shows that every day of a strike will take approximately six days to clean up in terms of the congestion impact in the ports . In broad strokes , that is also what we saw back in October .
All in all , a strike — especially a protracted one — will create substantial issues for US importers and exporters . As the window is now closing in terms of moving cargo prior to such a strike , the best approach at this point is for those importers and exporters to explore what they can do to nurture an environment wherein a deal is made between the union and the terminals , hence preventing the strike from happening .
email : lars . jensen @ vespucci-maritime . com
28 Journal of Commerce | January 6 , 2025 www . joc . com