Imports Expected to surge as retailers race to beat potential East Coast strike

Retailers appear to be bringing in merchandise ahead of a potential strike at East Coast and Gulf Coast ports this fall

Imports Expected to surge as retailers race to beat potential East Coast strike

Monthly inbound cargo volume could see a near-record surge this month as retailers appear to be bringing in merchandise ahead of a potential strike at East Coast and Gulf Coast ports this fall, according to the National Retail Federation (NRF) in its latest Global Port Tracker report.

“Retailers are concerned by the possibility of a strike at ports on the East and Gulf coasts because contract talks have stalled,” said Jonathan Gold, the NRF’s vice president for supply chain and customs policy. “Many retailers have taken precautions including earlier shipping and shifting cargo to West Coast ports. We hope to see both sides resolve this issue before the current contract expires because retailers and the economy cannot afford to see a prolonged strike. This comes on top of ongoing disruption issues including the attacks on commercial vessels in the Red Sea.”

As previously reported by sister publication Furniture Today, some 85,000 dockworkers, unionized under the International Longshoremen’s Assn. (ILA), will see their labor contracts expire Sept. 30 with the U.S. Maritime Alliance (USMX). Both the ILA and USMX released statements late last week indicating a successful negotiation is still quite far off.

“We are very far apart, particularly on the economic issues,” ILA President Harold Daggett wrote in a Facebook post responding to the USMX statement. “In fact, we are at an impasse.” Daggett also accused shipping CEOs of “taking home bonuses in the billions” and of “raising rates on their customers due to global conflicts.”

In June, talks broke down primarily over the issue of automation. The ILA discovered terminals at certain ports are using an auto gate system, which autonomously processes trucks without ILA labor and allegedly violating the coast-wide master contract currently in place. This system, initially identified at the Port of Mobile, Ala., is reportedly being used in other ports as well, ILA said.

Impact On Container Rates

Notably, the fear of a strike could help bridge the gap in differences in container rates to each coast, according to the Journal of Commerce.

“Spot rates from Asia to the East Coast are typically higher than rates to the West Coast, but the differential is at its highest point in almost two years amid signs of a significant loosening in capacity to the West Coast and growing importer concerns about the potential for East Coast labor action,” it said in a newsletter. “The differential reflects a rush of imports into the East and Gulf coasts ahead of Sept. 30 that will likely begin drying up after Aug. 15, after which it’s too late for goods to reach store shelves by Black Friday after Thanksgiving and too late to avoid the possibility of a strike.”

“Aug. 15 is pretty much the last hurrah for the East Coast,” a carrier executive told the Journal of Commerce.

The NRF agreed.

“Importers are continuing to grow their inventories and are shifting cargo to the West Coast as a precaution against potential labor disruptions,” Hackett Associates founder Ben Hackett said in the NRF report. “We calculate that the shift has pushed the West Coast share of cargo we track to above 50 percent for the first time in more than three years.”

According to the NRF, U.S. ports covered handled 2.16 million twenty-foot equivalent units – one 20-foot container or its equivalent – in June, the latest month for which final numbers are available. That was up 3.6 percent from May and up 17.7 percent year-over-year. That brought the total for the first half of 2024 to 12.1 million TEU, up 15 percent over the same period in 2023.

Ports have not yet reported July’s numbers, but NRF projects that volume has shot up to 2.34 million TEU, up 22.1 percent year-over-year and the highest level since the record of 2.4 million TEU set in May 2022. August is forecast to also total 2.34 million TEU, up 19.2 percent year-over-year.