Potential Strike at East and Gulf Coast Ports Threatens to Disrupt U.S. Trucking Networks and Warehousing

The looming strike by East and Gulf coast port workers is already impacting U.S. trucking networks, pushing more goods into truck lanes earlier than usual as shippers try to move freight ahead of a possible work stoppage. The effects would be more significant and felt much further inland from ports if a strike were to last more than a few days.

Drayage and trucking firms are currently moving containers from eastern and southern U.S. ports, utilizing intermodal trains to ship containers east-to-west, and looking for storage space for goods and containers. Rising outbound truckload volumes from ports are expected to tighten capacity this week.

If work along the East and Gulf coasts stops for more than four days, it could potentially set the trucking industry on a path toward pricing recovery. Truckload spot rates have remained low for most of 2024. Contract rates have stabilized, and there are indications that rates may increase in the fourth quarter or early 2025. A prolonged strike could reset market expectations.

The market has already seen an uptick in container movement earlier in the month. A less-than-truckload (LTL) carrier in the Philadelphia area, which handles drayage and transloading for customers in the Northeast and mid-Atlantic regions, notes that the primary concern is space. Exporters needing to continue production for international customers may seek more warehousing space to store inventory during a strike, so their goods are available once the ports reopen. This demand will likely impact short-term warehousing availability.

The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) remain at an impasse over a new master contract covering East and Gulf coast dockworkers. Wage increases and terminal automation are the primary points of contention, and the union has indicated it will not agree to a contract extension once it expires on September 30.

Logistics and trucking firms are receiving increased inquiries from customers concerned about the potential strike. Many shippers have contingency plans developed during the COVID-19 pandemic and are now putting them into action. Shippers have been closely monitoring how quickly lanes can be turned over as they prepare for potential disruptions.

The trucking industry is approaching a near equilibrium between supply and demand. With markets this balanced, any disruption can lead to significant volatility and price fluctuations. A port strike could accelerate this trend, potentially causing a rapid market shift.

A spike in truck pricing is more likely if a work stoppage lasts more than a few days and would be amplified if the strike extends for a week or more. The longer the strike continues, the more challenging it will be to clear out backlogs, with recovery time for each day of strike lengthening the delay.

National suppliers of intermodal drayage, truckload, and warehousing services are focused on helping customers implement contingency plans ahead of a potential strike. Many are prioritizing moving as much freight as possible from the ports to keep warehouse operations active.

A week’s recovery time for every day lost is a common rule of thumb, and a longer strike would result in significant congestion and delays at ports, causing any remaining truckload capacity on the highways to be quickly absorbed once operations resume.

If the dispute is resolved in a few days, the impact would be minimal. However, a prolonged strike would cause significant disruptions heading into the peak holiday season, creating a bottleneck effect when ports reopen, as all shippers would seek to move their goods simultaneously.