An analytical framework established by Goldman Sachs analysts shows that if the International Longshoremen's Association (ILA) and the United States Shipping Alliance (USMX) fail to reach a new contract agreement within three days (before the end of September 30), strikes may break out at ports along the U.S. East Coast and Gulf Coast, jeopardizing $5 billion in international trade per day.
“We analyzed the potential impact on trade values at East Coast and Gulf Coast ports if a construction disruption occurred (we take no view on the likelihood of any outcome),” Goldman Sachs’ Jordan Alliger told clients Thursday.
Alliger went on to note that “more than $4.9 billion per day of international trade is at risk along the East and Gulf coasts, and supply chains could become less fluid due to congestion, which in turn could cause shipping prices to rise again.”
“We remind customers of the scale of possible industrial action early next week. Any strike would immediately result in 45,000 ILA workers leaving the container ports. These ports account for 52% of all port traffic in 2023. In other words, any disruption would trigger a massive supply chain blockage across the eastern half of the United States.”
Alliger and his team of analysts shared their thoughts on the situation, estimating that potential disruptions could impact approximately 61% of total U.S. ocean trade and 25% of total U.S. daily trade in October.
Separately, the CEO of Flexport, one of the largest supply chain logistics operators in the U.S., recently warned: “The biggest surprise before the presidential election that no one is talking about? The looming port strike that could shut down all ports on the East Coast and Gulf Coast 36 days before the election.”
Earlier this week, Alliger told clients that congestion levels at U.S. ports were at two out of 10 ahead of a potential strike. Meanwhile, strike preparations are underway at the Port of New York New Jersey, with officials at the major port urging shippers to halt freight operations.
Details of the contract proposal between the ILA and USMX have not yet been made public. U.S. Transportation Secretary Pete Buttigieg said: "ILA is asking for a 77% wage increase in the new contract." Judging from the statements issued by the ILA and USMX, the two sides still have very different negotiating intentions, and there is still some distance to reach a negotiation agreement. The risk of a strike is rising.
According to experts cited by Bloomberg, if the strike lasts for a week, it could cause up to $7.5 billion in losses to the U.S. economy. If the strike really happens, it is expected that the impact will not only be limited to the United States, but will also affect the global trade system.
The article is forwarded from: Jinshi Data
