The International Longshoremen's Association (ILA), a North American labor union, recently threatened to go on strike if a new agreement cannot be reached before the existing contract expires on Sept. 30.
Experts worry that a potential large-scale port strike could have a devastating impact on the U.S. economy and cripple the global supply chain.
According to media reports, the ILA is advocating for significant wage increases in the new six-year agreement, arguing that inflation has completely eaten into any raises and wages over the past six years.
The ILA also demands a total ban on the automation of cranes, gates, and container movements used to load freight at over 30 U.S. ports.
As the deadline approaches, there is increasing concern that a large-scale port strike in the United States could become a reality. This could potentially be the first major strike to occur along the East Coast and Gulf of Mexico ports since 1977.
About three-fifths of container shipments to the United States are transported through the East and Gulf Coasts, and according to logistics experts, it is not feasible for the West Coast ports to handle the entirety or a significant majority of these shipments if they were redirected.
"Even a two-week strike could disrupt supply chains until 2025," Grace Zwemmer, associate U.S. economist with Oxford, warned in a new report.
According to transportation analysts at JPMorgan, a strike could cause a daily economic loss of 5 billion U.S. dollars, equivalent to approximately 6 percent of the country's daily gross domestic product.
Even if shippers turn to West Coast ports, congestion may occur, leading to cargo delays and significant increases in shipping costs.
In response to the situation, some international shipping companies are preparing for a shutdown of all ports along the East Coast.
Market expectations of a breakdown in labor negotiations causing another disruption in the supply chain have led to an increase in stock prices for shipping giant Maersk Group, which has risen nearly 20 percent in the past two weeks as of Tuesday.
Mike DeAngelis, the senior director of international solutions for freight visibility platform FourKites, believes the potential port strike will only exacerbate the current difficulties.
"We're facing a perfect storm -- with the Red Sea disruptions preventing normal access to the Suez Canal, and the Panama Canal's still-reduced capacity, an ILA strike would effectively choke off major arteries of global trade," DeAngelis said.
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