U.S. longshoremen from Maine to Texas are on strike, and experts say it won’t be long before the tech industry feels the supply chain pinch, which could easily stretch into early next year. It warns that there is.
The International Longshoremen’s Association (ILA) launched a strike at midnight on October 1, with tens of thousands of workers walking off the job loading and unloading cargo at ports on the East Coast and Gulf Coast of the United States.
The union demanded a $5-an-hour wage increase in each year of a planned six-year contract with the United States Maritime Union (USMX), which represents ports and shipping companies on those coasts.
“We also want absolute confidential language that there will be no automation or semi-automation, and we demand that all container fees be donated to the ILA,” said Harold, union president.・Mr. Daggett argued.
Container Royalty was created in the 1960s with companies consolidating international cargo into larger shipping containers to reduce the number of items that had to be taken off ships. ILS claimed that employers were funneling money into container fees that should have been distributed to members in full.
USMX claimed that on the eve of the strike, it offered ILA a “nearly 50% wage increase,” but the union rejected the offer.
“While they may claim significant increases, they conveniently omit the fact that many of our members operate multi-million dollar container handling equipment for as little as $20 an hour,” the ILA said. I objected.
“The USMX side claims that it is willing to negotiate the ring on empty, having waited until the eve of a potential strike to present this proposal,” the union added, adding that the USMX side waited until the eve of a potential strike to present this proposal and is therefore prepared to negotiate the ring on empty. The ILA noted that it had not received a proposal from the USMX, saying, “Our members feel undervalued, especially given the sacrifices they have made to keep our ports open and the economy moving during the pandemic.” Considering that.”
The ILA contract (PDF), which expired Sept. 30, says union-represented longshore workers will start at $20 an hour and reach a maximum of $39 an hour after six years on the job. Multiple news sources report that some ILA members can earn more than $200,000 a year if they work regular overtime.
High-tech supply chain pain
While it sometimes feels like we’re still recovering from supply chain disruptions caused by the coronavirus, we’re now facing another disruption in imports of high-tech products and materials that could last for months. .
Many of the United States’ high-tech imports pass through West Coast ports, but Brian Whitlock, Garnter’s senior research director for logistics, said the ripple effects of the East Coast and Gulf Coast attacks could reach the West Coast sooner rather than later. I warned you that this is likely to happen. Please hang out.
“If you look back at the last time there was a strike on the U.S. West Coast in 2002, it took a full six months to recover from an 11-day strike,” Whitlock told the Register in an emailed statement. “If the strike lasts longer than two weeks, it will have a devastating impact on supply chains that could last for months into the first quarter of 2025.”
The ship has been rerouted to the West Coast and could take several weeks to arrive. Delays will ripple across global shipping, as containers stuck on ships won’t be returned to ports and origin locations won’t be able to ship new goods.
U.S. West Coast ports also don’t have much space, Whitlock points out. It is already operating at 60 to 71 percent capacity. That means many ships diverted from the East and Gulf Coast will be stuck waiting for ports to open as supplies dwindle and fresh produce expires.
When capacity is held up or delayed in transit, spot market prices rise rapidly.
“Waiting times for vessels waiting to dock on the West Coast will increase significantly from days to weeks, overall shipping capacity will begin to shrink, and there will be disruption to global trade overall,” Whitlock said. “If capacity is held up or delayed in transit, spot market prices will rise rapidly.”
Whitlock also noted that the solidarity actions of the International Longshore Warehousing Union (ILWU), which represents longshore workers on the U.S. West Coast, could result in further delays for ships rerouting to the U.S. West Coast. We reached out to the ILWU to find out if it is planning any work delays or other measures, but did not receive a response.
We also contacted ILA and USMX to learn about the status of negotiations. The latter said that it understands the need to negotiate with the ILA and wants to return to the negotiating table provided there are no preconditions.
“We remain committed to negotiations in good faith to address the ILA’s demands and the USMX’s concerns,” the alliance said, adding: “We are unable to agree to any preconditions for returning to negotiations.”
But what about air travel? Could companies put their products on planes to avoid sea lane backups? Alvin Nguyen, Forrester’s senior semiconductor division, said that while this will likely be the case for some time, there is another trade-off with air-dropped chip components: They’re expensive.
“(Air transportation) does not solve the problem of strikes,” Nguyen said, adding, “Items that cannot be transported by air are expected to be delayed, and products that can be transported by air are expected to be more costly.” .
In other words, the tech world is once again in a difficult situation where supply chains are disrupted and prices can fluctuate, giving us the opportunity to see in real time whether the industry has learned anything from the pandemic. It means that there is.
In the meantime, we hope that ILA and USMX can reach an agreement before the technology sector is thrown into trouble again. ®
