Hapag-Lloyd CEO Rolf Habben Jansen has raised concerns about the growing likelihood of a longshore strike that could close ports along the U.S. East and Gulf coasts, noting that the risk has increased since earlier in the year. Shippers have already responded by frontloading cargo in anticipation of possible disruptions. The potential strike revolves around the expiration of the current contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) on September 30. While Maersk expects that longshore workers will continue to work past the expiration date, the ILA leadership has maintained its stance that no contract extension will be granted. This uncertainty has driven up U.S. cargo volumes since May as businesses prepare for potential delays.

Negotiations between the ILA and USMX have stalled, particularly over wage demands, with the ILA seeking a 76% increase over six years. The USMX has offered what it describes as an “industry-leading” wage proposal, but the two sides remain far apart. Maersk CEO Vincent Clerc believes a strike is unlikely and that an extension may be reached, although any shutdown could cause weeks of delays in restoring regular cargo operations. Meanwhile, ILA President Harold Daggett has urged union members to prepare for a strike starting October 1 if a deal is not finalized, citing strong carrier profits as justification for the wage demands. As tensions rise, Hapag-Lloyd reported a decline in profits, attributing last year’s higher earnings to an unusual market environment.

Source: Journal of Commerce