US strikes threaten global trade

Mike DeAngelis, head of International Solutions at FourKites said that global trade is facing significant disruptions due to a combination of challenges, including restricted access to the Suez Canal caused by Red Sea disruptions and the ongoing reduced capacity at the Panama Canal.

Add to this the possibility of strikes by the ILA next month and shippers are facing a ‘perfect storm’, said DeAngelis.

“In anticipation of the strike, shippers have been pulling forward imports and the busy shipping season. But frontloading can only get you so far,” he said.

“Automotive and agricultural exporters might find themselves in a particularly tight spot. We could see a significant drop in US agricultural exports, potentially leading to increased food prices in countries that rely heavily on American produce.

“For the auto industry, this could exacerbate ongoing supply chain issues, potentially leading to production slowdowns or even temporary plant closures.”

While West Coast and Canadian ports are expected to see increased traffic, they cannot fully absorb the volume from the East and Gulf Coast, potentially leading to weeks-long backlogs.

“A strike could also lead to inventory shortages, potentially impacting holiday shopping seasons and year-end manufacturing targets,” said DeAngelis.

Air freight remains an option but is already strained by high demand. Companies are expected to continue prioritising resilience in their supply chains, potentially sacrificing efficiency and profit to mitigate ongoing risks.

Political intervention may become necessary as the strike’s impact grows, especially with upcoming elections, concluded DeAngelis.