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Photo of the Week
Port workers from the International Longshoremen’s Association (ILA) participate in a strike at the Virginia International Gateway in Portsmouth, Virginia, U.S., October 2, 2024. REUTERS/Jose Luis Gonzalez
Top Stories
Tentative Deal Ends Port Strike, But Key Issues Remain Unresolved
U.S. dockworkers and port operators struck a deal on Thursday to end an at-times contentious strike that paralyzed key Atlantic and Gulf Coast ports for three-days this week. The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) agreed on a hefty 62% wage hike, while extending negotiations on other outstanding issues like automation until January 2025—placing the new deadline after November’s presidential election and before the typical surge in shipping demand seen leading up to Chinese New Year.
Despite a growing chorus from Republican lawmakers and industry, the Biden Administration resisted using Taft-Hartley Act powers to end the strike, favoring collective bargaining while also pressuring port employers represented by the USMX to improve their offer. At least for now, the tentative agreement averts potential multi-billion-dollar supply chain disruptions during this year’s particularly busy peak shipping season.
Backlog Remains
The three-day U.S. port strike may have ended, but the ripple effect on global supply chains is far from over. With at least 44 ships waiting to dock and over 120 en route, experts estimate it could take two to three weeks to clear the cargo backlog. Xeneta’s Peter Sand warns the delayed ships will cause scheduling disruptions into 2025, particularly affecting shipments from the Far East ahead of Chinese New Year. Freight rates have already surged, with a 58% spike for North Europe to U.S. East Coast routes. While the immediate crisis is over for now, the road to supply chain recovery is likely to be bumpy and costly.
Shipping Stocks Sink
Global shipping stocks took a nosedive after the U.S. dockworkers strike was suspended earlier than many had expected, dashing hopes for a freight rate surge and forcing investors to recalibrate predictions in the market. AP Moller – Maersk dropped 8.6% in Copenhagen, marking its steepest decline in months, while Germany’s Hapag-Lloyd plummeted 14%. Asian shipping giants Cosco Shipping and Kawasaki Kisen also experienced significant losses, while investor favorite ZIM Integrated Shipping Services (ZIM) plummeted as much as 16% before closing the day down 12.5%.
Automation Debate Rages On
The dockworkers’ strike may be over, but the battle over automation rages on. Companies represented by the USMX view automation as a path to higher profits, but unions like the ILA argue it eliminates jobs. To highlight the issue, ILA leader Harold Dagget points to the Auto Gate system at APM Terminals (Maersk) in Mobile, Alabama, which led to canceled negotiations with USMX in early June. The controversy revolves around the use of an autonomous truck processing system, which the ILA sees as bypassing their labor. The union claims this system is spreading to other ports too, taking ILA jobs with it. “Machines don’t feed families,” Daggett said on Friday.
With only 100 days remaining to reach a final deal, Xeneta’s Peter Sand cautions that automation remains a critical hurdle. Despite the temporary reprieve, the issue could trigger further disruption coinciding with key shipping cycles, including post-holiday inventory replenishment, spring season imports, and preparations for the Chinese New Year. “Shippers aren’t out of the woods yet; automation remains a major obstacle,” he warns.
In Other News… SS United States to Become World’s Largest Artificial Reef
Aerial photo historic SS United States in Philadelphia. Photo: Felix Mizioznikov/Shutterstock
The historic ocean liner SS United States is set to be transformed into the world’s largest artificial reef off the coast of Destin-Fort Walton Beach, Florida. The agreement, announced by the SS United States Conservancy and Okaloosa County, follows a legal battle over the ship’s eviction from its Philadelphia dock. Launched in 1951, the SS United States holds the transatlantic speed record and was originally designed to transport troops during the Cold War. Though the Conservancy had hoped for preservation, reefing was seen as a “more dignified option” than scrapping. The $10.1 million project will boost the region’s status as a diving and fishing destination and include a museum to celebrate the ship’s legacy.
Healy Returns to Arctic as China-Russia Presence Grows
Two months after an engine room fire, U.S. Coast Guard icebreaker Healy is back in action, departing Seattle on October 1 for a 10-week mission in the Arctic. Expected to operate in the Beaufort Sea, Healy’s return comes as China and Russia intensify their joint Arctic activities. Chinese and Russian Coast Guard vessels were recently spotted in the Bering Sea, marking the farthest north U.S. forces have observed Chinese ships. The Pentagon has raised concerns over the growing China-Russia alignment in the region, as China continues to pursue its Polar Silk Road ambitions. Meanwhile, the U.S. awaits its first new icebreaker in nearly 30 years, with the Polar Security Cutter facing delays.
Ice Shuts Russia’s Northern Sea Route Early
The summer shipping season on Russia’s Northern Sea Route is ending weeks ahead of schedule due to early ice formation, particularly in the Laptev, East Siberian, and Chukchi Seas. Vessels without ice class must vacate the waterway by October 15, with light and medium ice-class ships following by October 20 and 31, respectively. This early shutdown is in stark contrast to previous summers when the route remained clear of ice. Currently, container ships, oil tankers, and bulk carriers are racing to complete their transits before the route closes. Memories of a 2021 incident, where two dozen vessels were trapped by ice for over a month, loom large as Russia seeks to avoid a similar crisis.
Sounion Salvage Continues
Officials have provided updates on the ongoing rescue of the M/T Sounion, a Greek-flagged tanker attacked by Iranian-backed Houthi militants in the Red Sea. The tanker, carrying one million barrels of oil, was set on fire by the Houthis in August, threatening one of the largest oil spills in history. Under the protection of the EU’s Operation Aspides, international firefighting teams have made some progress in controlling and extinguishing the fires, but some fires remain now more than one month later.
Houthi Attacks Resume
A screenshot from video showing a Houthi USV attack on the tanker Cordelia Moon.
After a brief lull, the Houthi militant group resumed attacks on merchant vessels in the Southern Red Sea. On Tuesday, the oil tanker Cordelia Moon was struck by an unmanned surface vessel (USV), causing damage. The Houthis later released video footage of the incident. That same day, a missile hit the bulk carrier Minoan Courage. Fortunately, no crew members were harmed in either attack, and both ships continued their journeys. Authorities caution that the Houthis persist in targeting vessels linked to the U.S., UK, Israel, and coalition partners. The threat has now expanded to include ships associated with companies that have previously made port calls to Israel.
Iran Missile Attack on Israel Raises Middle East Tensions
In a significant escalation, Iran launched around 200 ballistic missiles at Israel on Tuesday in retaliation for Israel’s strikes against Hezbollah in Lebanon. The U.S. Navy, deployed in the Eastern Mediterranean, intercepted several missiles using destroyers USS Cole and USS Bulkeley. Despite the large-scale attack, initial reports indicate minimal damage in Israel.
Israeli officials have declared their intent to retaliate, with Iran warning of a “more crushing” response to any Israeli counteraction. According to a threat circular from maritime security firm Ambrey, an Iranian response could impact energy infrastructure and international trade in key waterways such as the Strait of Hormuz, Arabian Sea, and Bab el-Mandeb Strait, as well as offshore Israel. Consequently, Ambrey assesses that Israeli shipping and offshore facilities, along with U.S. shipping interests in the region, face heightened risk.
As always, we’d love to hear your feedback. Email [email protected] with any questions, comments, tips, or concerns. Don’t forget to check out the Club Discord and gCaptain.com for the latest maritime news.
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