US beef market debates effect of potential International Longshoremen's Association strike

US beef market participants and related industry professionals have conflicting opinions about the potential for a strike on the US East and Gulf Coasts by the International Longshoremen's Association, a union that represents dockworkers in those regions.

The ILA's current six-year contract agreement with the United States Maritime Alliance is set to expire Sept. 30, and the groups have yet to agree to new contract terms. Should the contract expire, the ILA is prepared to call a coastwide strike from Maine to Texas on Oct. 1. Many US beef buyers and traders believe the US government will not allow a strike in the East and Gulf ports due to the implications on the nation's supply chain and upcoming presidential election.

"Letting the ILA [strike] play out would be a disaster politically," said a US beef buyer.

A transportation specialist said, "[there is] no way that the union is going to put the Democrats in such a bad position that would allow them to lose the election."

According to industry sources, it appears that marine terminal operators and ocean carriers, specifically the Mediterranean Shipping Company, are prepared for the strike to begin. The Mediterranean Shipping Company is seen as a bellwether in the global shipping market, sources said. Following the strike, a motion will be presented by the group to force the ILA to return to work for 45 days. If no resolution is reached within that period, another motion will be filed to extend the working period. In this scenario, an arbitrator will be appointed by the court within the time frame to help develop a resolved contract.

Although beef and other meats are not the largest volume cargo received in East Coast ports, it is likely to be the most affected, as refrigerated containers and the generator sets that power them are in short supply, according to industry specialists. Companies with freight in reefers will want freight removed in advance of the strike and all at once, further limiting the supply, said the transportation specialist.

Most US beef buyers have not changed their buying habits or shipping plans. So far, beef prices have not changed in response to the possibility of strike. Although diverting shipments headed to the East and Gulf Coasts to the West Coast is a possibility, the costs may not be worth the trouble, said a US beef sales director. The average cost of diverting a load is around $7,000, but demurrage costs may be less, depending on the length of a strike, said the source.

"Everyone is praying and hoping nothing happens...but it could," said the US beef buyer.