10/3/2024 update: The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USXM) have reached a tentative agreement, extending their Master Contract until January 15, 2025, and resuming normal operations. Despite the strike’s short duration, at least 38 container vessels are backed up, significantly impacting shipping and logistics. The backlog is expected to take 15 to 21 days to clear, according to estimates from the Department of Commerce.

Forty-seven thousand dockworkers represented by the International Longshoremen’s Association went on strike at midnight on October 1, 2024. The ports they serve stretch from Maine to Houston accounting between 43%-49% of all U.S. imports.  A prolonged strike at the ports could lead to major supply-chain disruptions right before the holiday season and potentially have political fallout as the November election nears. J.P. Morgan analysts estimate it would cost the U.S. economy between $3.8 billion and $4.5 billion a day. With this kind of impact, analysts do not expect the strike to last longer than a week, but the ramifications may last much longer.

Nine of the 10 most active ports are on the East or Gulf coasts, seven of which are Texas or Louisiana based. However, for this particular strike, according to the API, crude oil imports and exports will not be directly affected, as their workforce is administrated by separate contracts. This strike is more focused on imports of food, vehicles, heavy machinery, construction materials, chemicals, furniture, clothes and toys.  

Crude and NGLs: Key Factors to Watch, even if Indirect 

As mentioned above, crude may not be directly impacted by the current strike. However, the ports of Houston, South Louisiana, and Corpus Christi which are heavily tied to the energy industry, will feel the effects, even though crude oil and other hydrocarbons are not the primary targets. The energy sector requires support from secondary markets which ultimately rely on complex global supply chains. Those industries include chemical, machined parts, vehicles, heavy machinery, and construction materials.  

While the impact to crude and other hydrocarbons may not be a classic bottlenecking in demurrage charges (fees that are applied when cargo remains in a port or terminal or longer than the allotted free time). The subsidiary charges that will be passed down from the other industries such as higher prices for vehicles, or more expensive machined products will ultimately drive energy prices up. 

Impacts on the triazine market. 

Triazine, a chemical familiar to natural gas treatment, agriculture, and wastewater treatment, is highly impacted to global supply chains. If triazine or its raw materials are imported through the East or Gulf Coast ports, a strike could disrupt the timely delivery of these chemicals, leading to shortages.   

The U.S. both exports and imports triazine. While domestic production is robust, the U.S. also sources triazine from other countries for various industrial and agricultural purposes. Companies such as BASF and Dow Inc. play significant roles in both the production and global trade of triazine. In the U.S., triazine is manufactured by several key chemical companies, with major production facilities concentrated in states like Texas. As we saw back in February of 2022 during the Texas freeze, supply disruptions can wreak havoc on start-up efforts. When the crisis concluded it took months for normalcy to return, a major port strike could have similarly lasting effects. 

Alternatives during prolonged outages may find shippers seeking deliveries to West Coast ports; however, diverting shipments may prove to result in even longer delays. If warehouse inventories run out due to a prolonged strike, companies may simply seek non-triazine solutions. For example, when considering treating H2S in crude oil or natural gas, taking into account the product’s supply chain exposure should be studied. Commodity based products such as triazine could be greatly impacted in port strike scenarios.   

A prolonged dock worker strike especially along the Gulf Coast ports may not see direct impact to crude and NGL import and exports, but energy prices could ultimately be impacted by the long supply chain effects due to the other impacted industries that are served along these busy ports. A more discrete impact will likely affect Triazine availability, resulting in price volatility due to supply chain bottlenecks and increased transportation costs.  

Sources: 

https://www.barrons.com/articles/port-pay-dock-workers-pay-demands-7e5b52dd 

https://www.psmarketresearch.com/market-analysis/triazine-market-report