Recommendations for the Looming Port Strike

An Expert's View about Customs in the United States

Posted on: 15 Sep 2012

With a Strike Looming, its time to think of options to keep your business running smooth.

STAR  USA  INC.  419.281.4100   East and Gulf Coasts continue to face ILA strike prospects Star USA INC meets with all its internal logistics experts to review alternatives There has been a lot of hype and speculation around the breakdown in talks between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) last month. Although talks between the negotiating parties will resume at a meeting next week, a resolution is not necessarily imminent; therefore, Star USA Inc recommends its clients be prepared for any outcome. Star USA Inc internal logistics experts have met to discuss the impact of a strike and to consider alternatives for our clients – both importers and exporters. Impact A diversion to U.S. West Coast or Canadian ports will cost an approximate additional fee of $800 per 20’ container or $1,000 per 40’ container. These port congestion surcharge (PCS) tariffs go into place as of October 1. Heavy congestion is expected as all U.S. shippers move towards these ports. Note that the PCS can be assessed during congestion regardless of whether or not the East Coast ports are closed for the labor dispute. There is also a risk that these ports will strike in solidarity or will call work slowdowns, which will create additional cargo, backlog. Finally, cargo destined for closed ports can now be diverted by carrier contingency plans to ports in the Caribbean or Europe under international maritime law. Those shipments may also have the PCS applied. Various sources of information are available to the shippers and consignees, including the following: • www.fmcs.gov • www.cbp.gov • www.ilaunion.org • www.usmxlaborupdates.com direct information should also be available from trade associations or committees that you may be a member of. Recommendations Star USA Inc. has been monitoring and analyzing the situation, including exploring shipping options for our clients. To minimize disruption, we recommend clients take the following actions: 1. Exporters must move to processing any pending orders to the ports and obtain bookings for outbound freight as soon as possible. Bookings for outbound cargo are typically confirmed on a first come, first serve basis with carriers, and we expect the ships to come to full capacity before the October 1 deadline closing of the East and Gulf Coast ports if a solution is not found next week. 2. Importers should forecast any purchase orders (POs) that must arrive in early October and consider airfreight for those products. Putting them on a ship next week will mean a likely delay – either congestion on the West Coast or a diversion from the port of destination to a third port of the carrier’s choosing to wait for the ports to open. 3. Clients should be sure their insurance covers in transit strikes and diversions and unusually long transit times (more than 30 days). 4. Holding cargo at origin or placing the cargo on slower sea freight services may also be an option if current inventories of buffer stock exist. Importers should put a hold on any orders by PO if they can wait the decision out. 5. Few Mexican ports were viable in the last strike of the Gulf Coast ports, so we recommend you contact us before accepting a booking solution from carriers or other logistics service providers, in the event of a prolonged strike. 6. Star USA Inc.’s airfreight forwarding group is pursuing air charter and scheduled carrier “block space” offerings with air carriers. If you expect to require airfreight space in the early weeks of October, please contact your service representative as soon as you have a projection of your space, weight, and gateway needs. While the potential impact of an East Coast port strike is highly disruptive, being prepared and proactive now can mitigate your risk. Contact Star USA Inc. today at 419.281.4100 to tailor-make a solution just for your business.  
Posted: 15 September 2012

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