With delays, increased freight costs, and capacity constraints across global supply chains, importers must explore alternative strategies to minimize the impact on their businesses.
October 2024 is proving to be a challenging month for global trade and logistics. A series of events, including labour strikes at key North American ports, airspace closures in the Middle East, continued slowdowns in the Red Sea, and China’s Golden Week, are causing widespread disruptions.
These factors are putting pressure on supply chains, leading to backlogs, increased costs, and capacity constraints.
North American importers and exporters are having to navigate these complications to maintain the smooth flow of their goods across borders.
Here’s a comprehensive look at the latest developments and how they are impacting trade.
Port operations resumed on October 3, 2024, after a three-day strike by 350 longshore workers at Montreal’s Viau and Maisonneuve terminals, which represent approximately 40% of container traffic at the Port of Montreal¾ Canada’s second-largest port.
However, in a recent update, the longshoremen’s union issued a new notice for an indefinite overtime strike beginning at 7 a.m. on October 10. Refusing to work overtime represents an escalation of the ongoing dispute between port workers and employers.
The Maritime Employers Association (MEA) has formally requested that the union withdraw the strike notice, calling it a “pressure tactic” and warning that a complete overtime stop will significantly affect port operations.
The MEA has also made it clear that employees assigned to shifts with incomplete crews will not be paid, stating that such measures are necessary due to the expected operational slowdowns.
It warned that the ongoing labour dispute has already reduced cargo traffic at the Port of Montreal.
Last week’s port strike disrupted the flow of critical goods into Canada and impacted various industries. Now, with the overtime strike on the horizon, businesses relying on the port could face further operational delays and increased costs.
In addition to the labour disruptions, the cost of container shipping is on the rise. Maersk has announced a peak season surcharge (PSS) of $2,000 per TEU and FEU from Europe and the East Mediterranean to Canada, effective October 23.
Other carriers, including CMA CGM and MSC, are following suit with similar surcharges, which will further burden Canadian importers and exporters financially.
Businesses using this key trade hub should continue to monitor the situation closely and factor in rising shipping costs. They should also consult their freight forwarder to consider alternative routes and transportation methods.
Meanwhile, dockworkers at 36 U.S. East Coast and Gulf Coast ports staged a strike on October 1 that halted nearly half of the country's ocean freight.
45,000 U.S. port workers, represented by the International Longshoremen’s Association (ILA), initiated their first large-scale strike since 1977 after negotiations for a new six-year contract failed to reach a resolution. The strike disrupted a significant portion of U.S. containerized goods.
The Biden administration supported the union and encouraged port employers to raise their offer. It cited the substantial profits the shipping industry has seen since the COVID-19 pandemic.
According to a source familiar with the negotiations, a tentative agreement was reached that includes a wage increase of approximately 62% over six years.
The workers’ union initially demanded a 77% wage hike, while the employer group had previously offered nearly a 50% raise. The new agreement doesn’t meet the union’s original demand but represents improved compensation for port workers.
Though the strike has been temporarily suspended until January 15, 2025, the supply chain remains strained as negotiations between dockworkers and port authorities continue.
Businesses that rely on goods flowing through major U.S. ports like New York, New Jersey, and Miami should remain prepared for possible delays. The suspension has eased immediate concerns, but until a permanent resolution is reached, businesses should stay cautious and proactive in managing their supply chains.
Recent airspace closures in the Middle East—due to heightened geopolitical tensions—are further complicating global supply chains. These closures have forced airlines to reroute cargo flights, particularly those carrying electronics, medical supplies, and other high-value goods.
Though not as far-reaching as North American port strikes, these stoppages have delayed air freight deliveries and raised concerns for importers relying on time-sensitive shipments.
For those importing goods from or through the Middle East, supply chain managers must adjust their logistics strategies, plan for potential delays, and explore alternative routes where possible.
Further south, cargo traffic in the Red Sea has slowed due to regional tensions, creating additional challenges for vessels transiting through this crucial waterway.
For global shippers and North American importers, particularly those engaged in trade with the Middle East and North Africa, this slowdown adds another layer of complexity to an already fragile supply chain.
Moreover, the Panama Canal drought and disruptions from extreme weather events are also impacting shipping reliability.
Simultaneously, China’s Golden Week 2024, which began on October 1, has temporarily halted production at Chinese factories, leading to shipping delays across the globe.
With businesses in China closing for the holiday week, major trade routes are experiencing significant capacity reductions. The annual stoppage has seen freight rates rise, with many businesses rushing to get goods out of China ahead of the closures.
The impact of China’s Golden Week is expected to last well beyond the holiday, with congestion at key ports anticipated well into the fourth quarter of 2024.
For importers in North America, this means higher shipping costs, longer transit times, and a tighter supply of goods, especially in industries dependent on Chinese manufacturing. Freight forwarders are advising their clients to book shipments early and ensure sufficient buffer stock to cover any delays.
Although strikes at the U.S. East and Gulf ports have ended, the situation at the Port of Montreal remains unclear. U.S. and Canadian importers are advised to take proactive steps to mitigate risks and circumvent other widespread disruptions.
These include:
Please reach out to one of our trade professionals for guidance on managing import and export challenges during these events.