This week:
- ILA and USMX to resume master contract talks this week, leaving little time before strike deadline
- More ocean carriers announce labor disruption surcharges ahead of potential ILA strike
- After a very challenging 2024, resilient US East Coast ports prep for expansion and growth in 2025
- US retailers, manufacturers doing more than just frontloading ahead of potential new tariff hikes
- Despite current lukewarm demand, US LTL freight volumes expected to surge as sector realigns
ILA-USMX Talks to Resume Jan. 7, One Week Before Potential Strike Date
The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) will resume negotiations on a new master contract for dockworkers at US East and Gulf Coast ports this week, according to multiple sources.
Following a three-day ILA strike in October 2024, both sides agreed to a temporary contract extension, which expires on January 15. Efforts to reach a new master agreement broke down in mid-November. Multiple people familiar with the negotiations say the ILA and the USMX will return to the bargaining table on Tuesday, January 7. Neither side has yet publicly commented on the reports.
While the ILA and the USMX have previously reached an agreement on wages, port automation remains a key sticking point. The ILA strongly opposes the further implementation of semi-automated, rail-mounted gantry cranes at the ports in question. While the USMX argues that automation technology benefits dockworkers by increasing productivity, the ILA maintains that it will replace human labor.
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More Ocean Carriers Announce Surcharges Related to Potential ILA Strike
When the ILA-USMX talks came to a halt in mid-November, multiple ocean carriers announced plans for surcharges related to a potential second strike. As the deadline for a new master contract nears, more container lines have announced similar surcharges, bringing the total to at least five.
CMA CGM, Yang Ming, and Hapag-Lloyd recently unveiled surcharges ranging from $1,000 to $1,700 per FEU. These follow surcharge announcements from Mediterranean Shipping Company (MSC) and Zim Integrated Shipping last month. While Zim explicitly cited the potential ILA strike as the reason for its surcharge, MSC attributed its charge to restructuring its trans-Atlantic network following its departure from the 2M Alliance.
For its part, CMA CGM is not officially implementing a “strike surcharge.” Instead, it announced a $1,500 per FEU “peak season surcharge” to go into effect on January 15 — the deadline for a new ILA-USMX master contract. The extra charge will be for cargo from the Indian Subcontinent, the Middle East, the Red Sea, and Egypt.
Hapag-Lloyd is acknowledging the connection to the potential ILA strike with a $1,700 per FEU “work disruption surcharge” on cargo gated-in on or after January 20, covering both trans-Atlantic and trans-Pacific shipments. Yang Ming will implement a “port congestion surcharge” of $800 per TEU and $1,000 per FEU on January 15 for cargo to the US and Canada.
Despite a Challenging 2024, US East Coast Ports Prep for Growth in 2025
Despite unexpected container volume increases, a multi-week closure in Baltimore, and the ILA strike in October, US East Coast ports proved resilient throughout 2024. Now, with several ongoing infrastructure improvement projects in the works, these ports are preparing for growth and expansion in 2025.
According to a year-in-review analysis recently published by the Journal of Commerce (JoC), import volumes at East Coast ports last year significantly exceeded projections. A lot of this activity can be chalked up to US retailers frontloading imports ahead of the October ILA strike and in anticipation of the possible second work stoppage this month.
The Port Authority of New York and New Jersey saw imports surge 14.1% through November, far surpassing its initial 3% growth forecast. Part of the increase was due to cargo diversions from Baltimore following the Francis Scott Key Bridge collapse in March. Overall, East Coast import volumes grew 9.5% year-over-year in the first 11 months of 2024, the strongest showing since 2021.
Several infrastructure projects are expected to enhance East Coast port capacity this year. CMA CGM will open a new berth at its New Jersey terminal, increasing capacity at the busiest East Coast port. New York-New Jersey is also installing six new cranes to accommodate larger vessels. A completed railyard expansion in Virginia will boost intermodal capacity at Norfolk by 25%.
US Businesses Prepare for Potential New Import Tariffs in Multiple Ways
After making new import tariffs a central part of his campaign, US President-elect Donald Trump is set to return to the White House on January 20. In response, many US businesses in the retail and manufacturing sectors have been frontloading goods before any such increases can occur. However, an analysis published on January 2 by Supply Chain Dive shows that American companies are preparing their supply chains in multiple ways beyond simply stocking up.
“(Frontloading) won’t address the long-term implications of tariffs and is far from a one-size-fits-all solution, especially for less shelf-stable goods like food,” Supply Chain Dive Editor Philip Neuffer wrote. He goes on to say that tariffs from the last two presidential administrations have forced businesses to diversify sourcing outside of China.
Neuffer also notes a push for improved supply chain visibility so that the country of origin for imports is more transparent, ensuring businesses pay the correct duties. Companies “can also review their product classifications to ensure they have proper expectations for tariff impacts.,” Neuffer said.
US retailers and manufacturers are also sourcing goods produced in so-called free-trade zones, which are not subject to US Customs and Border Protection (CBP) jurisdiction. Meanwhile, other US businesses have sought more domestic sources to avoid tariffs and import duties altogether.
LTL Volumes to Surge in 2025 as Market Continues Post-Yellow Settling
Looking at the state of the US less-than-truckload (LTL) sector, analysts at the JoC forecast a surge in freight volumes in 2025 despite current tepid demand.
In an industry roundup published last week, JoC Senior Editor William B. Cassidy said the 2023 shutdown of Yellow Corp. significantly disrupted the LTL market. Things are only now settling as carriers continue to expand their networks and reach. The auction of Yellow’s terminals is further contributing to market realignment, with 112 remaining for sale as of Q4 2024.
Reshuffling in the LTL space led to noticeable price increases. By October 2024. all-inclusive LTL prices were over 5% higher than before Yellow’s closure in July 2023 and 31% higher than in December 2019. Carriers not only invested in terminals, but also new equipment and technology to improve efficiency and service.
Despite volume stabilization in the latter half of 2024, Cassidy says LTL executives are optimistic about a volume surge this year. Carriers are expected to be up to the task thanks to increased network density and efficiency improvements.
