Contingency Plan In Case of a Strike

The International Longshore & Warehouse Union (ILWU), which has always played a major role in container shipping at 29 US West Coast ports, could make a big impact in 2014, but the impact might be difficult to grasp. The rumor is that the International Longshore & Warehouse Union might be ceasing labor negotiations with the Pacific Maritime Association (PMA) on June 30th. This is the date that the International Longshore & Warehouse Union contract is set to expire. About 20,000 workers are covered by the contract. If they end their labor negotiations on June 30th, the result could be a strike from the International Longshore & Warehouse Union. The ports and terminals impacted by the strike on the West Coast might temporarily close.

Having these ports and terminals close will be terrible, especially in July. This is peak season for imports originating from the Far East to the West Coast. Thus, this could present a major shipping problem. Freight forwarders are working on alternative options for shippers, who need to develop a contingency plan in case of a strike. The options include rerouting containers to Vancouver Port or to Mexico. Another option is shipping airfreight. If a shipper continues to ship via the ocean, then their ocean freight rates might increase. Current published rates include a surcharge of $1000 per container, if the strike happens. Let us hope that the strike does not occur, and a new labor contract can be agreed upon before the deadline. The shipping world will be watching.