United States Chinese Network report
Workers at 36 ports on the East Coast of the United States and the Gulf of Mexico plan to go on strike on October 1, which could affect half of the U.S. ocean-going shipping ports, causing logistics delays and supply chain paralysis, according to the International Longshoremen's Association (ILA) union on September 29. The impact will be focused on shipping containers, as well as the transportation of new cars and trucks. Dozens of ports are expected to close container shipping including major shipping hubs in New York, Baltimore, Norfolk, and Houston. If all thirty-six ports go on strike, this will be the first coast-wide strike by the union since 1977.
In recent months, the union had demanded that employers raise wages sharply and end the port automation project. Otherwise, the approximately 47,000 workers responsible for loading and unloading goods and equipment maintenance at the port would go on strike at 0:01 a.m. on Tuesday, October 1, 2024. Major shipping hubs such as New York, Baltimore, Norfolk, and Houston are all expected to cease container traffic. The main dispute between the two sides at the moment is salary. Under the current contract, which expires on Monday, September 30, 2024, the maximum wage for dock workers is $39 per hour. The Association demanded an increase of $5 per hour per year for the six years of the new contract, which would bring them to $69 per hour in the final year of the contract. The Maritime Union said the agency remained committed to negotiations but accused the unions of asking for exorbitant prices.
About three-fifths of containerized freight currently shipped to the United States is shipped through the East Coast and the Gulf of Mexico’s coast. If the ports are closed, it would cost the United States economy up to $5 billion a day. For the Port of New York/New Jersey, the economic impact could be as high as $641 million per day. Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, noted that the strike could be more damaging than the pandemic supply chain damage in 2021 and 2022, when freight transportation was slowed down but still active.
While the big and powerful companies prepared for the strike in advance, including shipping earlier than usual and moving some of their freight operations to the West Coast, analysts believe that these measures will have a limited effect on weakening the impact of the strike. While some cargo may be diverted to the West Coast, these ports will not be able to absorb the full volume of cargo from the ports along the East Coast and Mexico Bay Coast, and the backlog will have serious consequences. According to the National Retail Federation, "a one-day shutdown will take three to five days to recover." The longer it takes, the worse it gets. According to CNN, if the strike occurs and lasts for a long time, the supply of mass products entering the United States through East Coast and Gulf of Mexico ports could be disrupted, including chocolate, alcohol, fruits such as bananas and cherries, and certain cars. It also means that the prices of existing goods could be pushed higher, halting the United States economy's recent progress in fighting inflation. The union said the strike would not affect the movement of military cargo and cruise ship operations. Workers on oil and gas ships will also not participate in the strike, and gasoline and fuel prices are not expected to be affected. (Source: United States Chinese Network)
Senior lawyers from MPLG International Law Firm's new energy/smart manufacturing legal team have been helping Chinese factories land in North America for many years, and the subsequent impact of the International Dockers' general strike on the East Coast and Gulf Coast of Mexico on Chinese companies is as follows:
1. Affected Industries
The United States of thirty-six port workers' strikes will directly affect import and export enterprises that rely on these ports, such as manufacturing, car companies, cross-border e-commerce, logistics and transportation, and electronics and home appliances, resulting in supply chain disruptions or delays, sales out-of-stock and increased costs.
2. State primarily affected: Texas
As an economic state and a port of Houston with multiple ports, Texas is a major importer of chemicals, energy equipment, and consumer goods, and Chinese companies operating in these areas will bear the brunt of the strike. New York and New Jersey: As important import gateways, local businesses, particularly in the consumer goods and machinery sectors, are under pressure from supply chain disruptions and delays. Georgia: The Port of Savannah is an important port in the southeastern United States, and the import and export of various commodities will affect Chinese business in the region.
3. How to deal with the port workers' strike crisis and cost pressures
Our senior lawyers in labor law, company law and contract law provide the following legal advice for your reference:
1) Sound contract preparation: Review and update contracts with suppliers and customers to ensure that they include clauses to address delivery delays or cost increases.
2) Ensure force majeure clauses: The contract must contain a clear force majeure clause that covers events beyond your control, such as port strikes. In this way, in the event that the performance of the contract is not possible as a result of a strike, the performance of the obligation can be temporarily discharged or postponed without constituting a breach of contract.
3) Dispute resolution mechanism: Clearly specify the dispute resolution mechanism in the contract so that disputes caused by strikes can be quickly resolved and the impact on the business can be mitigated.
4) Alternative fulfillment: Presuppose alternatives in the contract, such as allowing the use of alternative ports or modes of transport. This makes it possible to quickly adjust the flow of goods when major ports are unavailable, avoiding major delays.
5) Multi-vendor strategy and inventory planning terms: Contracts with multiple vendors to spread risk. Ensure that at least one supplier is able to operate in other ports, reducing reliance on a single supply chain. Require partners to maintain a certain level of safety stock so that short-term demand can still be met in the event of a supply chain disruption.
6) Work with legal counsel: Ensure that these provisions are clear and applicable to possible extreme situations through corporate counsel, so as to effectively mitigate the negative impact of the port strike on the business.
7) Insurance protection: Purchase business interruption insurance to protect against financial losses caused by strikes. Ensure that port strikes are clearly included in the insurance contract.
Through the above-mentioned legal measures, companies can reduce the impact of strikes on their business to a certain extent and ensure the continuous supply of critical goods and services.
For more information, please call the hotline of MPLG Law Firm:
Phone: 281-805-7169 (Chinese)
Phone: 713-818-8866 (Chinese)
Phone: 281-805-7169 (English)
Fax: 281-805-7172
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Headquartered in Houston, Texas, United States, Mosaic Paradigm Law Group PC has offices and partner law firms in Los Angeles, Washington, D.C., Beijing, Shanghai, Vietnam, and other places in the United States. MPLG International Law Firm brings together more than 20 multi-ethnic lawyers and assistants, many of whom have more than 20, 15 and 10 years of practice experience from professional law firms in China and the United States, specializing in labor and employment, corporate counseling, contract review, dispute resolution, cross-border mergers and acquisitions, intellectual property, business immigration and other fields, especially have a unique and deep understanding of China-US cross-border transactions and related dispute resolution. MPLG International Law Firm provides comprehensive legal services to all types of corporate clients in the United States, from Fortune Global 500 companies to start-up technology companies, with a strong list of transactions and a unique dispute resolution approach, as well as transactional, litigation, and compliance professional services.
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