Threat of ‘calamitous’ East Coast strike for trucking industry moved to January

The problem behind the three-day East Coast port strike remains unresolved.

Overall, trucking did not feel significant impacts of the short-lived October longshoreman strike—spot market rates were barely affected while volume demand merely shifted, thanks in part to the strike’s rapid resolution.

“If that strike had gone on, it would have been calamitous,” Dean Croke, principal analyst at DAT Freight & Analytics, told FleetOwner. “You would have seen a fairly rapid exodus of capacity out of the industry, and that would have resulted in rates turning up pretty quickly.”

But the union members and East Coast ports aren’t done with each other yet. The labor agreement between the International Longshoremen’s Association and the United States Maritime Alliance now expires on Jan. 15—during the peak winter season right before the Chinese New Year that shippers plan around. The next deadline could renew the parties’ heated dispute, bringing a much more disruptive strike to the U.S. economy.

How the October port strike impacted trucking

What happened to the U.S. port strike?

The October work stoppage among eastern U.S. ports came from a dispute between a major port union called the International Longshoremen’s Association and a port business alliance called the United States Maritime Alliance.

The port strike came from a dispute between ILA and USMX around compensation and automation. ILA wanted a significant pay raise and a complete ban of automation for port work in its next contract.

ILA held a strike impacting 36 U.S. ports from Oct. 1 to Oct. 3. The strike primarily affected ports on the East Coast and Gulf Coast.

The strike ended with a temporary solution: Both sides agreed to a 62% wage increase over six years and to extend their existing contract until Jan. 15, 2025. ILA and USMX will resume their negotiations for the new contract deadline.

Shippers’ demand for freight movement changed significantly ahead of the strike. Peak shipping season occurred much earlier than usual to accommodate the risks posed by the labor dispute, according to Croke.

ILA warned of a strike more than a year before it occurred, giving shippers plenty of time to move inventory before the work stoppage. This movement of inventory before a several-days-long stoppage made a noticeable impact on the timing of container movement.

“This is a period in time where labor agreements have a profound impact on the freight market. Importers have been pulling forward all of their inventory; peak shipping season happened six to eight weeks earlier this season, because of the fear of a strike and a shutdown, which was telegraphed almost a year ago,” Croke said. “We had a record number of containers, ever, in the month of September.”

Shippers knew in advance that 2024’s peak shipping season would come early as a direct consequence of the East Coast port labor dispute. Logistics experts recommended freight customers prepare to start in June instead of July. In September, the busiest U.S. ports handled near-record container imports.

Shippers’ freight demand changed not only in timing but also destination, with peak shipping on the West Coast coming earlier than usual. In September, the ports of Los Angeles and Long Beach both had their busiest peak season on record.

Major shippers with goods originally destined for the East Coast redirected their cargo through West Coast ports to be transloaded to their destination. This brought some extra volume to for-hire trucking.

Striking dock workers near the Port of New Orleans on October 2.

“We saw a big peak in shipping off the West Coast in June, and you wouldn’t normally expect to see that until August/September,” Croke said. “And that’s largely because shippers were saying, ‘hey, we can’t afford to have our Halloween inventory, Thanksgiving retail season tied up in an East Coast strike. Let’s get as much of it into the West Coast as we can.’”

Overcapacity and low freight rates maintained downward pressure on rates, which also helped shippers better prepare for the strike. Low rates kept West Coast diversions affordable.

“Because freight rates are what they are, it’s still economical to bring freight into Los Angeles and put it on a train or truck to Chicago, Harrisburg, Dallas, or Kansas City,” Croke said. “The rates have allowed that to be a very competitive advantage.”

Freight rates relatively unaffected by the strike

The strike prompted shippers to move some freight to the West Coast, bringing new cargo to for-hire trucking. Despite this, October’s short labor strike had little effect on spot market rates.

The port strike’s weak rate impact was overshadowed by Hurricane Helene, which disrupted spot rates when it moved through the U.S. just days before the strike.

“We didn’t see any impact that moved the national rate needle like Hurricane Helene did,” Croke said. “Helene had a profound impact; nationally, rates went up about 3 cents a mile, so it moved the national needle. In the Southeast, rates went up 10 cents a mile on average.”

Recent labor disputes in trucking

The Economic Policy Institute reported that U.S. major strike activity increased by 280% in 2023. The trucking industry felt the shockwaves of that activity.

The bankruptcy of Yellow Corporation (the third largest LTL fleet in the nation at the time) in August 2023 was brought in part by a strike announcement from the International Brotherhood of Teamsters. The United Auto Workers strike in September 2023 significantly disrupted automotive manufacturing operations—a key industry for trucking.

“Containers impact a very small percentage of the truckload economy, whereas a massive industry like automotive has a profound impact on the trucking industry,” Croke told FleetOwner. “We always get more nervous about strikes in big truck factories or trailer manufacturers because that affects more of the freight that we haul. There are more truckloads of freight going into the making of a car than, say, a container of shoes.”

FTR Transportation Intelligence found a similar effect from Hurricane Helene: Average broker-posted rates in Truckstop jumped by 8 cents in the week ending Oct. 4. The rate increase was strongest in the Southeast. According to FTR, the average broker-posted spot rates rose to their highest level since early August—and dry van, refrigerated, and flatbed rates all saw the sharpest rate increase for a comparable week since at least 2008.

Including a fuel surcharge, FTR’s average rate for the week was only up 0.4% year over year—but was notably the first y-o-y increase since July. Excluding a fuel surcharge, the average rate was 11% higher than the previous year.

Why rates remained low

Why didn’t the port strike make a significant impact on trucking rates? Shippers had plenty of time to plan around the danger of a few days’ work stoppage; overcapacity in the spot market remained strong; East Coast port freight doesn’t directly translate to spot market carriers; and the strike ended quickly.

The factors keeping freight rates low (carrier overcapacity, most notably) remained the same regardless of a port work stoppage.

“We’ve still got an oversupplied market. It was just a shift of when the volume got moved as opposed to a substantial change in supply and demand,” Croke said. “The demand just moved in terms of timing.”

The cargo most affected by the strike had little influence on long-haul truckload operations. East Coast freight is mostly a drayage function that does not translate directly to the spot market.

“Container imports represent only about 10% of truckload demand. Domestic manufacturing is the big driver now,” Croke said. While container import disruptions may eventually slow domestic manufacturing output, those effects are less direct.

Trucking association critical of unions

The nation’s largest trucking association frequently denounces union activity. The American Trucking Associations’ stance reflects the industry’s skepticism of organized labor.

Most recently, Chris Spear, president and chief executive of ATA, shared fiery anti-union rhetoric during the ATA management conference in Nashville.

Spear said that, because of the Biden administration’s UAW support, “big union bosses are emboldened,” that the entire administration is tucking itself “into the pockets of big union bosses,” and that the administration has dismissed non-union employers “as subservient bottom feeders.” ATA previously officially denounced the UAW strike.

“To be clear, ATA is not fundamentally opposed to labor unions,” Spear clarified between criticisms.

Spear blamed Biden for not intervening in the ILA port strikes, saying “this president values union thuggery more than you.” Spear suggested unionization also makes ports less efficient or productive, “kneecapping our entire economy.” Spear previously appeared on Fox News calling the strike “union greed” as a labor counterpart to the term corporate greed.

Port strike threat is not over

The strike may have ended, but the labor dispute is far from done.

ILA and USMX kicked the ball down to January 2025 for renewed negotiations. The opportunity for industry disruption still looms around the calendar—at another peak shipping period.

“This is still not over,” Croke said. “There’s a chance that it could disrupt the market. It’ll occur again right in the middle of peak shipping ahead of Chinese New Year.”

Chinese New Year effectively shuts down manufacturing in China for two weeks in early February.

"If you have a strike on January 15, and that’s in the middle of trying to get inventory ahead of the Chinese New Year slowdown, you could see an even bigger disruption to the market,” Croke said.

In addition, with the new deadline taking place after a U.S. election and a week before the next president’s inauguration, political motivation and sway of a lame duck president to intervene is significantly reduced.

As shippers prepare their inventories in advance of the next labor dispute deadline, ports can expect the Christmas slowdown to be a little more busy than usual.

Automation is a complex problem

The most contentious issue in the dispute between ILA and USMX is much more difficult than simple wages: port automation. Automation threatens the employment prospects of dock workers, the unions contend, but ports also face pressure to increase efficiency with novel technologies.

ILA demands a permanent ban on automation for its next contract, which is a difficult promise to fulfill.

“Because it’s automation, this is a much bigger sticking point than salary or hourly wages. This is about people’s jobs,” Croke said. “That kind of makes the likelihood of hostile negotiations fairly high. It’s a tougher one to resolve than just saying ‘We’ll give you a pay raise.’”

A longer strike could disrupt trucking

With the question of automation still unresolved, a January 15 strike might last much longer than it did in October.

Yellow’s mortal conflict with Teamsters

A fight with organized labor can be deadly for even the largest businesses.

In the wake of its bankruptcy announcement, the CEO of the now-extinct massive LTL hauler Yellow Corporation blamed the company’s failure on union bargaining disputes.

"All workers and employers should take note of our experience with the International Brotherhood of Teamsters and worry," Yellow’s then-CEO Darren Hawkins said on August 6.

Before the bankruptcy announcement, Yellow executives blamed Teamsters for blocking the company’s restructuring. Yellow sued Teamsters in June 2023 for allegedly sabotaging its business plan. Teamsters announced a strike a month later after Yellow failed to make a $50 million health care and pension payment in July and announced it would miss another massive payment in mid-August.

The union called off its strike at the last minute. However, Yellow’s shipment volumes had already plummeted in the wake of a strike announcement. A week later, Yellow shut down and filed for Chapter 11 bankruptcy shortly after.

The company suffered from severe mismanagement, but its fierce spates with the union deteriorated shipper confidence and became the final nail in Yellow’s coffin.

The average U.S. labor strike lasts about 40 days. Larger strikes tend to be briefer—but ILA’s roughly three-day-long strike in October was very short. A longer ILA strike may have lived up to news organizations’ apocalyptic rhetoric.

“If that strike had gone on, it would have been calamitous,” Croke said. “It would have had an impact on capacity if it had gone on longer because it would have forced a lot of carriers out of the industry; you would have seen capacity decrease dramatically.”

Drayage carriers are particularly vulnerable in the freight space, according to Croke.

“They don’t necessarily run very new equipment. They don’t make a lot of money,” Croke said. “If that [strike] had gone on much longer, I don’t know how many of them would have survived more than a week.”

Significant disruptions to their cash flow could quickly shut down these carriers, bringing supply and demand out of balance as carriers’ capacity plummets.

“You would have seen a fairly rapid exodus of capacity out of the industry, and that would have resulted in rates turning up pretty quickly,” Croke said.