No Strike But No Deal

The ILA suspends its strike after three days, punting risks into 2025

October 08, 2024 • Est. Reading Time: 4 minutes

Mobius Intel Brief:

The International Longshoremen’s Association (ILA) and its 45,000 dockworkers agreed to suspend its strike after three days last week. While reopening ports and easing backlogs are positive for near-term inflation/rate-cut risks, disruption threats are not off the table for 2025.

  • Immediate Intel: Inflationary price risks from port disruption are reduced after Thursday’s agreement but have not disappeared. Producers will likely see higher input costs for October, adding constraints to rate cut decisions for the Fed’s Nov. 7 meeting.

  • Intel for 2025: The ILA agreed to suspend its strike until January 15 after tentatively agreeing to a 61.5% wage increase over six years. However, union commentary remains staunchly against port automation and its threat to member employment. Interested readers can download the attached ILA Oct 6 memo to union members for more clarity on the group’s position.

Immediate Supply Chain Response:

The three-day strike created a 45-60 vessel backlog across East Coast and Gulf Coast ports, requiring an estimated two-to-three weeks to clear congestion.

East Asia to US East/West container rates dropped double-digit percentage points W/W but remain at historically elevated levels.

  • East Asia to US West Coast container rates fell 15.5% W/W to $5,760/FEU

  • East Asia to US East Coast container rates fell 22.4% to $6,744/FEU

While transpacific routes will likely benefit from fading strike risks and the early end to peak demand season, transatlantic routes retain upside potential that will likely extend into supply chain inflation.

  • Follow-on consequences of the three-day strike include significant congestion in several European hubs, amplifying the effects of carriers’ plans to reduce transatlantic capacity to maintain elevated freight rates.

Disruption fears from the ILA strike forced many Asia-US shipments to reroute to the West Coast, reducing late-September transit rates through the Panama Canal. With immediate strike risks resolved, near-term transit activity will provide indications of Q4 demand potential for the US and China.

ILA Statement.pdf416.24 KB • PDF File

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