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Global Category Intelligence
Q2 2025
Global Category Intelligence
Q2 2025
ALERT: Shippers Face Challenges After ILA, USMX Deal
22 January 2025
When facing a potentially devasting port strike along the US East and Gulf Coasts, the logistics sector adapted quickly to mitigate potential disruptions. Ironically, the sector's preparedness, now that a tentative agreement has averted a strike, is causing short-term supply chain challenges.
Mitigation Actions:
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Front-loading Cargo: Shippers preemptively increased cargo volumes by bringing in products early, notably spring merchandise, to buffer against potential port closures.
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Paused Bookings: Some shippers paused new bookings, leading to temporary supply chain inefficiencies.
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Secondary Sourcing and Route Shifting: Some cargo was rerouted to West Coast ports or sourced from secondary suppliers, contributing to longer transit times and higher transportation costs.
Immediate Impacts:
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Delays and Capacity: Ports will have delays as they work through the elevated cargo volumes. This is compounded by actions like shifting cargo to West Coast ports and using secondary supply sources, leading to longer transit times and higher costs.
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Financial Implications: These mitigation strategies will likely impact companies' balance sheets through increased inventory and higher cost of goods sold (COGS), potentially affecting margins and working capital.
Sector Specific Effects:
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Reefer and Hazmat Freight: U.S. export reefers and hazardous materials freight are expected to face more significant disruptions due to the carrier's mitigation actions, including rail service shutdowns and subsequent restarts.
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Rail Services: With some rail services having initiated shutdown procedures, there could be delays as services restart.
Additional Factors:
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Lunar New Year: The upcoming Lunar New Year on January 29 prompts additional cargo front-loading, adding strain on capacity.
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New Tariff Concerns: Expected tariff increases under the Trump administration influence shippers to front-load even more, further tightening capacity.
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