With the 15th January deadline for a new labour agreement fast approaching, the potential for a strike by the International Longshoremen’s Association (ILA) looms over nearly 40 US east coast ports, if negotiations fail.
Severe disruptions, impacting both imports and exports, will create ripple effects across the entire supply chain and businesses reliant on these key gateways must act swiftly to mitigate risks and prepare for potential delays diversions, and financial implications.
Risks to supply chains
A strike could have a profound impact on cargo movements, with goods destined for affected ports likely to face significant delays. Imports could be diverted to alternative ports, resulting in additional transshipment costs and increased transit times. Cargo ships may be forced to anchor offshore for extended periods, creating further bottlenecks.
On the export side, the challenges could include delays in rail yard operations, equipment shortages, and difficulties in returning loaded containers to terminals. This would particularly impact industries with time-sensitive shipments, such as perishables or manufacturing components.
Adding to the financial strain, shippers may encounter unforeseen costs such as congestion surcharges and demurrage fees. While the Federal Maritime Commission (FMC) previously discouraged certain penalties during work stoppages, its jurisdiction does not extend to inland or rail terminals, leaving businesses exposed to additional charges.
Strategic actions
To mitigate the risks, shippers are encouraged to take proactive steps:
1. Review shipping plans: Assess upcoming shipments to identify potential vulnerabilities. Highlight critical cargo that may require prioritised handling or alternative solutions.
2. Explore alternative routes: Investigate the feasibility of rerouting cargo through unaffected ports or shifting some shipments to air freight, particularly for time-sensitive goods.
3. Coordinate with partners: Engage with other supply chain stakeholders to ensure contingency plans are in place. Early communication can help secure limited capacity on alternative routes.
4. Build flexibility: Incorporate buffer times into delivery schedules and manage customer expectations for potential delays or disruptions.
The broader context: automation debate
The impending strike is occurring against a backdrop of heated discussions over port automation, with the President-elect calling on port employers to forgo automation and hire more union workers.
The ILA argue that automation threatens jobs and livelihoods, while port employers contend that it is essential for improving efficiency, increasing capacity, and supporting supply chain resilience.
While automation offers potential benefits such as greater density and faster container moves, the debate underscores the tensions between modernisation and protecting workers’ interests. The outcome of the ILA negotiations may set the tone for future discussions on balancing these priorities.
Our U.S. team’s expertise can be invaluable in navigating the complexities of shifting cargo flows during a strike, from addressing port-specific challenges to managing inland transport disruptions.
We are monitoring the situation closely, and will continue to provide timely updates and guidance, ensuring shippers are well-informed. We are ready to answer your questions and assist with contingency planning, including identifying alternative routes and securing additional capacity where possible.
For more information on how we can protect your supply chain from potential disruptions, EMAIL Adam Davies, Vice President.
