A strike by a US longshoremen’s union on October 1 has created great uncertainty because it would impact 36 ports along the East and Gulf coasts of that country, although some opportunities could open up for Mexico on the margin.
For several weeks, the International Longshoremen’s Association (ILA) said that negotiations with the USMX alliance of port employers had reached an impasse.
According to information from CNBC, the ILA represents more than 85,000 longshoremen and between 43 and 49% of all US imports and billions of dollars in monthly trade are at stake as the union approaches the deadline.
If the strike begins, five of the 10 busiest ports in North America will be closed, including those in New York, New Jersey and Houston.
On September 17, the ILA announced that all of its members are “more united than ever” in their determination to have a new fair contract with the USMX.
According to CNBC, the White House is not trying to help negotiate a deal, as it did last year during the West Coast talks, and a Biden administration official said the President would not use his federal powers to block a strike.
The federal Taft-Hartley law allows US presidents to intervene in labor disputes when they threaten national security. In this way, it “forces” workers to return to their jobs while negotiations continue, during an 80-day cooling-off period.
In general, trade in all types of goods would be affected. But in particular, the consulting firm Everstream Analytics highlighted that more than 91% of containerized imports and 69% of containerized exports of US pharmaceutical products pass through the ports involved.
The impacts and Mexico
In South America, there is already talk of damage. In Colombia, for example, the National Association of Foreign Trade, Analdex, stated on Wednesday that 61.3% of Colombian exports to the United States enter through the East Coast.
“Given the shortage of products or services that could result from the strike, it is necessary to satisfy these needs. Mexico has the capacity to do so to a large extent, thanks to its geographic proximity and its logistical advantages,” stated Alejandro Gómez Strozzi, partner of the American consulting firm Foley Arena.
Gómez Strozzi explained that this type of event affects the value chains and, because it is a force majeure, it generates confusion in many companies regarding who will pay the costs of the delays or losses caused.
To avoid this, he recommended that companies include contractual clauses in which the responsibilities of the parties in possible logistical problems such as these are specified, and not remain in limited agreements in this regard, sometimes only with the Incoterms.
Incoterms (International Trade Terms) are a set of standardized rules established by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international transactions. These rules specify who is responsible for the costs, risks, and tasks associated with the transportation and delivery of goods at different stages of the logistics process.
Source: eleconomista
