Risk of another US port worker strike looming threat for exporters

Last week, trade uncertainties mounted as hostilities in West Asia escalated, and port workers in the south-east and east coasts of the United States (US) went on strike. Towards the weekend, the striking workers decided to get back to work easing the anxieties of Indian exporters but the situation in West Asia remained tense, although there were slim hopes that the main combatants would step back from the brink.
 

Unlike the West Asia crisis that has the potential to hurt the trading interests of all the countries more or less equally, any disruption in the port operations on the east coast of the US has the potential to hurt India more than its competitors in East Asia. The reason is that the exporters in East Asia have a direct sea route to the west coast of the US through the Pacific from where goods can be moved to any part of that country through rail or road. For India, however, that is not a viable option because of greater distance and consequently greater freight via the Pacific.

The US is an important trade partner for India. Last financial year, i.e. in FY24, India exported goods worth $77.52 billion to the US, which is nearly 17.7 per cent of our total exports. The share is even higher if one excludes the exports of petroleum products. India imported goods worth $42.20 billion, which is about 6.22 per cent of our total imports. Here again, the share is much greater if the imports of crude oil are excluded. Most of India’s exports to the US go through the east coast of the US, which is nearer. So, most Indian exporters were staring at possibilities of vessels that left India in September not being able to berth in the US ports and even possibilities of the vessels getting diverted to Canada or Mexico. Luckily, those concerns have abated, following the decision of port workers in the US to return to work.

The striking workers are among the best-paid blue collar workers in the US. Yet, they could leverage their ability to bring the port operations to a halt to demand higher wages and ask for an end to further automation. For now, some compromise seems to have been reached on the demand for higher wages but the issue of automation still remains unresolved. The US ports are among the least efficient major ports in the world. It is likely that the port administrations or shipping lines will agree to bring in better efficiency through more automation but we have to wait and see how the negotiations proceed. The port workers have decided to carry on with the old contracts only till the first week of January, 2024. So, the worries that they may strike again on the issue of automation and disrupt port operations remain. The Indian exporters should, therefore, ship as much as possible 

in the October-December period.
 

In India, the trade union movement is very fragmented and at its weakest since independence. So, the fears of workers disrupting critical activities like port operations are very low. However, worries abound that our ports and airports are increasingly under the control of a few operators who have all the leverage to exploit their monopolistic positions in search of more profits.
 

Email : tncrajagopalan@gmail.com