Defensive Strategy

The contract between the International Longshoremen’s Association and the U.S. Maritime Alliance is set to expire on September 30, with negotiations stalled and the ILA threatening a strike. Retailers are shifting cargo to West Coast ports and shipping earlier to avoid potential disruptions.

In June, U.S. ports handled 2.16 million TEU (a 17.7% year-over-year increase), and July’s volume is projected to be 2.34 million TEU, marking the highest levels since May 2022.

The NRF predicts that 2024 will end with 24.9 million TEU, a 12.1% increase from 2023, making it the third-highest year for U.S. container imports.

Despite these challenges, NRF forecasts 2024 retail sales to grow between 2.5% and 3.5% over the previous year.

The legislation requires the U.S. Department of Defense to create a strategy to counter Chinese influence in global ports, which poses risks to U.S. national security and global trade.

China has been expanding its maritime network, including acquiring stakes in key ports worldwide, which is seen as a threat to U.S. interests. The bill aims to secure U.S. ports and prevent Chinese control over strategic infrastructure.

Lawmakers emphasize the importance of protecting U.S. economic and national security by reducing dependency on Chinese maritime infrastructure.

This demand follows the ILA’s recent 60-day strike notice to the United States Maritime Alliance (USMX) if a new contract is not agreed upon by September 30.

ILA President Harold Daggett indicated that the union's 45,000 members are prepared to strike starting October 1 if their demands are unmet.

The ILA is proposing a $5-per-hour wage increase each year, a significant jump from previous agreements and higher than the 32% increase secured by the International Longshore and Warehouse Union (ILWU) on the West Coast.

The ILA's proposal comes in the context of strong profitability for ocean carriers and follows other recent union victories, such as the United Auto Workers' 33% wage increase and the Teamsters' $7.50-per-hour raise in their contracts.

Chittagong Port, the primary gateway for Bangladesh's ocean trade, is mostly shut down, with only minimal activity for vessels already at berth. Inland transportation networks have also ceased operations.

Major carriers like Maersk and others are unable to manage supply chains effectively and may suspend Chittagong sailings until conditions improve.

This crisis comes amid recent capacity expansions by major liners to capitalize on Bangladesh's booming apparel exports, which hit a record $47 billion in 2023.

The unrest is causing concerns among Indian conglomerates with projects in Bangladesh, as they face additional costs and challenges due to the volatile situation.