As the US East and Gulf Coast port strikes continue into their second day, major shipping lines have started declaring force majeure, signalling a significant escalation in the crisis.
The International Longshoremen’s Association (ILA) and the US Maritime Alliance (USMX) remain at a stalemate, with no resolution in sight. Despite last-minute negotiations, the union rejected an offer, and President Biden has voiced strong support for the ILA and their demands, further complicating the potential for a swift resolution.
Container shipping lines are scrambling to adapt to the rapidly evolving situation; anchoring vessels, diverting ships to non-US ports, or even returning vessels without completing their US deliveries.
Congestion is quickly building, particularly in ports like Savannah and New York & New Jersey, where a combined total of 17 ships are waiting at anchor and over 50 are en-route.
While some carriers are finding alternative delivery options, many have been forced to declare force majeure, allowing them to suspend or change delivery locations, abandon cargo at alternative ports, and pass additional costs to shippers.
Force Majeure declared
The declaration of force majeure by shipping lines, including CMA CGM, ONE, and APL, means they are no longer bound to deliver goods according to the original contract terms. Under force majeure, carriers can reroute shipments, offload goods at alternative ports, or even abandon cargo where it is deemed safe and convenient. These actions, due to uncontrollable circumstances like the current strike, can result in significant delays and additional costs for shippers, which will be passed on at full price.
For shippers, the importance of insurance coverage becomes paramount in situations like this. With force majeure in effect, many of the usual protections provided by carriers are voided, leaving cargo at risk of being delayed, rerouted, or abandoned. Comprehensive cargo insurance can provide financial protection against these risks.
We can offer tailored insurance solutions designed to protect your cargo during unforeseen events like the current port strikes. With shipping lines declaring force majeure, it’s more important than ever to have comprehensive coverage that mitigates risks and prevents costly losses.
Reach out to us today to discuss how we can help you safeguard your supply chain and minimise the impact of ongoing disruptions.
