ILA Strike Threat Could Spark Early Peak Surcharge

Harold Daggett did trans-Pacific carriers a favor by threatening to strike East Coast ports this year, a veteran carrier executive said.

When the president of the International Longshoreman’s Association told The Journal of Commerce’s Trans-Pacific Maritime Conference in Long Beach Tuesday that his union would strike East and Gulf Coast ports if it doesn’t get the settlement it wants in talks to renew the contract expiring Sept. 30, it provoked moves by cargo shippers to divert Asian imports to the West Coast.

This will sop up excess cargo capacity on the eastbound trans-Pacific trade to West Coast ports, enabling carriers to implement an early peak season surcharge, the former carrier executive told me. The executive, who was formerly director of the trans-Pacific trades for a major Asian carrier, asked not to be identified.

After Daggett made his fiery statement in a panel with USMX Chairman and CEO Jim Capo at TPM on Tuesday, several shippers told me at lunch they are already moving up contingency plans to shift cargo away from all-water routes to the East Coast for delivery to Middle West and East Coast destinations by intermodal rail, which is a faster, but more expensive route.

A number of logistics providers also said they expect their shipping customers to ask them to shift their their cargo through the West Coast away from the East Coast.

Janet Lewis, shipping analyst at Macquarie Capital Securities in Hong Kong, told TPM on Monday that ocean transportation costs 18 cents to ship a pair of jeans from Hong Kong to Columbus, Ohio via the East Coast. “So it costs 3 cents more to ship it via the West Coast. That cheap insurance to make sure they get there,” said the former carrier executive.

Please consider registering in order to access the full article.