Thirty-six major U.S. ports are at risk of a standstill from the impending strike by the International Longshoreman Association (ILA). The ILA represents 85,000 workers across the East and Gulf Coasts of the U.S., and the current contract expires on September 30, 2024.
Kim Ekstroem, Shipco’s Global COO – Air, discusses the potential fall out and breaks down what you need to know to stay ahead of the developments.
How is the market reacting to the impending strike action?
The mere threat of a strike has already had an impact on the airfreight market. A couple of weeks ago, we started to see quote requests for large shipments which normally would be LCL or even FCL shipments. Forwarders and their customers started to brace themselves for a potential strike.
In the last week, many of these early requests turned into bookings and actual shipments. From the U.S. East Coast, we have seen an extraordinary number of large shipments, both import and export.
This is a smart move by the shippers. They control their destiny. While we have seen a small increase in the Trans-Atlantic air rates, prices are still reasonable. But, the question is for how much longer?
What immediate impacts will there be on the market?
As soon as the strike is a reality, or even before, when enough shippers are hedging for the possibility of a strike, the market will go into a frenzy.
The impact will be especially pronounced because airfreight capacity is limited – widebody passenger aircraft have cargo capacity equivalent to one 40-foot container or less.
There will be a huge imbalance of demand and capacity, and the airlines will take advantage of that. Almost immediately, there will be a lack of capacity, and rates will sky-rocket. The best-paying cargo will fly. What cost $2.00 per kg today could be $6.00 or more by the end of next week.
Normally the vast amount of export cargo flies at general cargo rates, and that normally gets your cargo going within a couple of days. All airlines have an express or guaranteed product at rates much higher than general cargo rates. These products and rates will come into play almost immediately. Airlines will prioritize express or guaranteed products at premium rates, leaving businesses scrambling for space.
What advice can you give to customers to protect themselves?
The key takeaway is communication. All the quotes we provide our customers are “subject to final details and acceptance by carrier”. Make sure your customer knows and understands that the airlines dictate the rates.
Kim Ekstroem
Global COO – Airfreight
