The prospect of renewed strike action at US East Coast and Gulf Coast ports poses the threat of further disruption to container shipping markets.

The International Longshoremen’s Association (ILA) suspended negotiations with the US Maritime Alliance (USMX) employers lobby on Monday in a dispute over port automation.

It has led to fears that shippers will try to beat any possible dispute by bringing forward shipments at a time when an early peak season has already led to rocketing freight rates.

“We have already seen shippers front-load imports ahead of the traditional peak season in Q3 due to concerns over the continuing supply chain impacts from the conflict in the Red Sea,” said Peter Sand, chief analyst of freight benchmarking portal Xeneta.

“They may now accelerate this approach if there is a further risk of major disruption on the US East and Gulf coasts later this year.”

The decision to suspend talks relates to a contract for workers at these ports that is due to expire on 30 September.

Sand said the front-loading of imports is part of a toxic cocktail of factors that has caused severe port congestion in Asia and Europe.

Automated processes implemented by Maersk and APM Terminals have come in for criticism by US port workers. Photo: Jonathan Boonzaier

These have already led to increases of more than $2,000 per forty-foot equivalent unit (feu) in ocean freight container shipping spot rates.

Average spot rates from the Far East to US East Coast have increased by 64% since 30 April to stand at $6,820 per feu on 11 June, according to Xeneta estimates.

Such rises would be worsened by a dispute at ports that account for 40% of US container imports from Asia.

Any disruption at US East Coast and Gulf Coast ports could keep spot rates elevated for longer, according to Sand.

Maersk in the crosshairs

Unions are angered by automated systems used by the terminal and shipping divisions of AP Moller-Maersk.

Unions object to the Auto Gate system used by APM Terminals, which autonomously processes trucks without ILA labour.

ILA president Harold Daggett, the union’s chief negotiator, said: “There’s no point trying to negotiate a new agreement with USMX when one of its major companies continues to violate our current agreement with the sole aim of eliminating ILA jobs through automation.”

Daggett made a fiery speech in July 2023 at the union’s quadrennial convention.

“Who the hell is a foreign company like Maersk, to come on to American soil and build fully automated terminals,” he said at the time.

“Mark my words, there is going to be an explosion, and the ILA and dockers around the world are going to light the fuse.”

Sand believes shippers will be hoping for a similar outcome to last year’s labour negotiations on the West Coast, where a deal was eventually agreed on after difficult negotiations.

“If an agreement cannot be reached and strike action takes place when ocean freight container networks are still under extreme pressure, it could be a hugely difficult end to 2024,” he said.