Shippers are watching how the contract talks between the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) will play out during the month of June. Key players on both sides have indicated they expect a smooth negotiation process even if a contract is not concluded by the June 30, 2022 expiration date.
Shippers are hoping negotiations between the ILWU and PMA will be seamless. However, they are still taking no chances. To avoid potential disruptions at West Coast ports should contract talks stall, shippers have been diverting containers to East Coast ports. The diversions are taking a toll on the East Coast ports. The port of New York had 18 ships waiting to be unloaded the week of May 22nd. Similar backups are taking place at the Port of Savannah and the other key East Coast ports.
Congestion has reached such a critical level that several ocean carriers have announced “blank” sailings to their June and July East Coast schedules. The return of blank sailings is not good news for shippers. While overall shipping demand might have briefly softened, allocation on East Coast ships is still in exceedingly high demand. Carriers have stated that blank sailings are necessary when congestion levels reach a critical level. Without blank sailings, congestion levels will continue to grow and schedule reliability will continue to suffer.
Heavy congestion is expected to hamper East Coast ports through the end of Summer. If contract talks between the ILWU and PMA take a turn for the worse, shippers should expect increased delays moving cargo through East coast ports.
