Strike By US Dockworkers Could Affect India's Exports, Industry Says

The US East Coast and Gulf Coast dockworkers' strike is expected to hurt the country's exports to America, which is the largest trading partner of India. Expressing concerns, exporters said that a lot of shipments go to the East Coast and from there, businesses take shipments to the West Coast of the US.

"There is a growing concern among the Indian exporters due to the strike. Amid the global economic slowdown, this is adding to the worries of the Indian exporters to the US, India's largest trading partner and biggest export destination," Chairman of the CII national committee on EXIM Sanjay Budhia said.

He said that due to the crisis, exports will be delayed which could lead to missed deadlines, contract penalties and strained relationships with US buyers.

Also, with ports on the East and Gulf Coasts experiencing disruptions, exporters may have to reroute shipments to the US West Coast or Canadian ports, incurring higher transportation costs and extended delivery times, Budhia, who is also MD of Patton International Ltd, said.

He added that rerouting may also lead to congestion at alternative ports, exacerbating delays.

"Also West Coast ports are already very congested and handling more cargo may not be feasible. Adding to the Exporters' troubles, dockworkers represented by the International Longshoremen's Association announced a strike on Tuesday, halting operations at 36 major US ports along the East Coast and the Gulf of Mexico," he said.

These ports handle nearly 55% of container traffic entering and leaving the US, including the largest 14 ports from Maine to Texas.

Budhia said that Indian manufacturers who rely on these ports for imports of raw materials and intermediate goods might also experience delays in receiving essential inputs, leading to slowdown in production cycles and contributing to higher inflation.

"Buyers in the US are getting very concerned and constantly asking for contingency plan for Shipments in Transit and shipment route for new shipments from India," he said, adding that it is important to hold discussions among the related parties to come to a consensus and restart the operations to minimise the macro impact.

Simultaneously, the Indian exporters must also continue to focus on their own competitiveness development to be on track to achieve the target of $1 trillion in merchandise exports by 2030, he said.

Federation of Indian Export Organisations Director General Ajay Sahai said that it is a matter of concern. "If the strike continues for long, it will affect our exports," Sahai said, adding that transportation cost is already high.

The US has emerged as India's top trading partner during 2023-24 with $120 billion (exports $77.51 billion and imports $42.2 billion) worth of merchandise trade. It was $129.4 billion in 2022-23.

According to the commerce ministry data, China was India's top trading partner from 2013-14 till 2017-18 and also in 2020-21.

Before China, the UAE was the country's largest trading partner. The US was also the largest partner in 2021-22 and 2022-23.

The strike does not augur well for India as its outbound shipments dipped by a steepest decline in 13-month falling 9.3% in August to $34.71 billion.

Think tank GTRI said that the strike is less than 48 hours old and is already causing delays in unloading and processing of shipments from India, affecting goods like textiles, pharmaceuticals and auto parts.

"If the strike continues, shipments would need to be rerouted to US West Coast or Canadian ports, leading to higher costs and longer transit times, which may result in increased prices for consumers," Global Trade Research Initiative Founder Ajay Srivastava said.

Indian exporters are already facing higher freight costs and delays due to disruptions in the Red Sea route.

The usual sea route from Mumbai to the US East Coast typically takes 29-30 days, passing through the Arabian Sea, Suez Canal, Mediterranean Sea and across the Atlantic via the Strait of Gibraltar to reach the Port of New York and New Jersey.

However, since October 2023, disruptions caused by Yemeni Houthi rebels in the Red Sea and Suez Canal, combined with the current workers' strike at US East Coast ports, will force ships to take a much longer route around the Horn of Africa and South America to reach the US West Coast.

"This detour will increase travel time and costs by 2.5-3 times, adding thousands of extra kilometres for internal transport within the US," he said.

Around 25,000 dockworkers at US East Coast and Gulf Coast ports have been on strike since Oct. 1, 2024, shutting down 14 major ports, including New York/New Jersey, Baltimore, Miami and Houston.

The number of container ships waiting to unload has jumped from 3 to 45, and the backlog could double by the week's end, potentially taking weeks or even months to clear. The strike is costing the US economy an estimated $4.5 billion to $7.5 billion per week, he added.

The International Longshoremen's Association is pushing for significant wage increases and a ban on automation, while the United States Maritime Alliance (USMX) has offered a nearly 50% wage hike over six years, the GTRI said.

"Talks are ongoing, but no deal has been reached. The US government is closely monitoring the situation but has not stepped in," it added.