What risk and insurance professionals need to know about the US port strike
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Authors: Tim Cain Chris Demetroulis Lars Gustafson Danelle Heathman

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The International Longshoremen's Association (ILA) union, representing 45,000 port workers, has issued a strike warning for October 1, 2024, after contract renewal talks with the United States Maritime Alliance employer group reached an impasse over pay, healthcare and automation. These negotiations, which span ports from Maine to Texas, are never easy or one-sided. If an agreement can't be reached before the contract expires, numerous shipping operations could come to an abrupt stop, causing significant and widespread impact on business operations, the economy, workforces, supply chains and various other aspects at a national and international level.

Key events amplifying the impact:

  • Many are still recovering from supply chain disruption after a bridge collapse cut off access to the Baltimore port earlier this year.
  • Hurricane Helene hitting the southeast has slowed port activity in the Gulf of Mexico, further complicating re-routing of goods.
  • The approaching holidays and critical shopping season — including Black Friday — make now one of the busiest times for ports.

Understanding your business reliance on shipping and port transportation is a critical first step in evaluating your risk and insurance programs. Gallagher is closely monitoring the situation as it unfolds, and this bulletin outlines key considerations and actions to take to help you mitigate and manage potential loss.

Key areas Critical impacts
  • Port of New York and New Jersey
  • Georgia Ports Authority
  • Port Houston
  • South Carolina Ports Authority
  • Port of Virginia
  • Jacksonville Port Authority
  • North Carolina ports
  • Port of New Orleans
  • Thirty-six ports will be impacted, accounting for 50% of all imported and exported goods in the U.S., according to Reuters.1
  • Sea-Intelligence estimates that for every day the ports are shut down, the supply chain will take four to six days to recover.2
  • Diversion to other ports may not be an option as other unions show support in this labor issue.

Top risks we're watching: Supply chain, inflation and workforce threats

  • Supply chain disruptions, transportation shortages and demurrage may pose considerable additional costs to companies.
  • Vessels may need to wait in a designated area, slow steam to delay arrival into ports or detour to other facilities, which may drive costs higher.
  • Increased shipping costs will be passed on to the consumer and could result in rapid increased inflation, shortages of all types of goods and food spoilage for both imports and exports.
  • If strikes last to mid-October, estimated job loss could reach 100K.
  • Goods with limited shelf life and/or strict temperature controls are at increased risk.
  • Marine insurers are closely watching the potential for loss or damage that could affect marine terminals and infrastructure, including increased potential for theft of goods delayed at ports, terminals and yards.

Take action: Talk to your insurance and risk management teams

It's critical that you speak one-on-one with your insurance broker, risk management team and carrier partners to understand your specific risk mitigation plan and insurance coverages, including:

  • Review your current insurance coverages and your renewal insurance plan with your broker to understand your specific circumstances and needs.
  • Revisit contingency and enterprise risk management plans in place. Be aware of and develop contingency plans for shipments that are high theft targets, time sensitive, prone to spoilage or require special care.
  • Explore alternative plans for shipping.
  • Check your limits regarding options for aggregation of cargo delivered to port for export.
  • Conduct an inventory of current goods and determine whether you have adequate reserves.
  • Review your security protocols during times of potential civil unrest.

Author Information

Sources

1Shepardson, David and Steve Holland. "US East Coast Port Strike Set to Start Tuesday, Says Union," Reuters, 30 Sep 2024.

2 "Impact of Potential ILA Strike," Sea-Intelligence, 14 Aug 2024.

Disclaimer

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