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    The 2024 US Port Strike: Lessons for Supply Chain Resilience

    • A U.S. port workers strike shut down 36 East and Gulf Coast ports in October. 
    • The port congestion delayed retail, auto, and agriculture imports and is expected to impact global shipping schedules through 2025. 
    • Proactive planning strategies include warehousing, diversified port routes, and intermodal transport to mitigate future disruptions.

    December 04, 2024 | Logistics

    In the first week of October 2024, nearly 45,000 dockworkers, who are members of the International Longshoremen's Association (ILA), went on strike at U.S. East and Gulf Coast ports. The reasons were higher wages and fear of job losses because of increased automation of the ports. The ILA union demanded a 77% (negotiation ended at 62%) pay increase over six years and legal security of the jobs post port automation. 

    The strike created a massive supply chain breakdown since 36 ports -- from Maine to Texas -- shut down. The shutdown raised concerns regarding shortages and even inflation, especially in the wake of Hurricane Helene. 

    On the third day of the strike, an agreement was reached on a tentative basis between the ILA and the United States Maritime Alliance (USMX). This would bring a 62% wage increase over six years. Additionally, it included suspension of the strike until January 15, 2025, so that more time is created for negotiation over issues like automation at the ports. 

    Impact on Ocean Transport 

    The port disruptions led to congested docks because the ships waiting to unload their cargo bottlenecked, affecting the turnover of goods and adding to delays in schedules globally. Delays and costs of longer negotiations, especially over demand for salary increases as well as fears of automation, affected retail, automobile, and agriculture industries in a big way as most of these industries are importers. 

    The ILA strike impacted not only the East and Gulf Coasts but the West Coast too since most union longshoremen from ILA are concentrated in major ports like Charleston, Houston, Miami, New Jersey, New York, and Savannah. 

    Affected ports carry about 40% of the total U.S. ports cargo volume, and therefore, the impact of extended strike upon the US trade, supply chains, and consumer markets was major. 

    It affected shipment of manufactured goods exported through container cargo trade, especially auto parts and consumer goods. 

    It also impacted auto production because of delays in arrival of major components. Consumer goods, in addition to electronics, experienced up to 50% volume delays in containers, prolonging into the holiday season and further exacerbating possible shortages and additional costs for consumers. Exports of coffee, bananas, and cocoa were also delayed. 

    The operations of shipments of other commodities were less affected since the large ship operations form part of employment contract that is independent. 

    The High Cost of Rerouting 

    Logistics and general freight costs have recorded jumped to new highs because of redirected routes and insufficient capacity from Asia through oceans to the U.S. 

    Rerouting options are limited; some vessels have diverted to Canadian and Mexican ports, but the main option is waiting outside affected U.S. ports, straining shipping schedules for goods from Asia into late 2024 and early 2025, according to freight analytics platform Xeneta. 

    This backlog because of the strike is likely to affect port schedules for months if automation demands and labor disputes remain unresolved during upcoming negotiations in 2025, adding uncertainty for shippers and logistics providers. 

    Lessons for Procurement & Supply Chain 

    The strike highlighted the importance of dockworkers to the U.S. economy and brought to the forefront the challenges of automation in the sector. 

    In this regard, the tentative ILA-USMX agreement will serve as a basis for future negotiations. Both parties are committed to discussing the complexities of modernizing port operations while providing fair labor practices. 

    The following are a set of proactive planning strategies that can help reduce the impacts of future port strikes on logistics. 

    1. Alternative and Diversification of Ports: 

    Companies should divert shipments to alternative, not affected ports. In the event of major ports labor disruptions, alternatives can be provided along the Gulf or West Coasts that, though lengthening transit time, keep the supply flowing. This reduces dependence on a single port and lessens the risk of congestion in any one port. 

    2. Strategic Warehousing and Inventory Management: 

    Increasing inventories and locating stock near secondary distribution centers can help cushion potential delays in supply chains. Therefore, the inland warehousing strategy should be strengthened with the objective of maintaining high order fulfillment even if their inbound shipments are delayed. 

    3. Alternative Modes of Transport: 

    In case a port is not accessible, companies can opt for intermodal transport, which will combine rail and trucking from secondary ports, or even shift essential goods to air freight despite their high costs. Air freight will be useful for high-priority or perishable items that cannot afford delays. 

    4. Collaborative Partnerships: 

    Partnering with reliable third-party logistics (3PL) providers ensures access to a broad logistics network that can quickly pivot in response to disruptions. Collaboration also allows shared access to emergency resources, distribution centers, and labor. 

    Author: Shreyasi Patel 

    Sources and references: 

    https://www.reuters.com/world/us/us-east-coast-dockworkers-head-toward-strike-after-deal-deadline-passes-2024-10-01/ 

    https://apnews.com/article/port-strike-ila-dockworkers-begins-e5468e760f46a64e4322d1702beb1f72 

    https://time.com/7027065/us-ports-dockworkers-strike-economy-impact/ 

    https://abcnews.go.com/US/dockworkers-strike-suspended-sources/story?id=114445386 

    https://www.cbsnews.com/news/east-coast-port-strike-what-to-know/ 

    https://www.dw.com/en/us-dockworkers-end-strike-after-tentative-pay-deal/a-70398810 

    https://blogs.tradlinx.com/the-real-impact-of-the-east-coast-port-strike-on-global-logistics-and-how-to-stay-ahead/ 

    https://www.euromonitor.com/article/us-ports-strike-impact-on-the-economy-and-supply-chains 

    https://shippingtelegraph.com/port-news/us-port-strike-poses-major-supply-chain-disruption-into-2025-analysts-warn/ 

    https://gartner.com/en/articles/how-us-port-strikes-disrupt-supply-chains https://glc-inc.com/2024/09/how-to-mitigate-disruptions-from-the-upcoming-ila-port-strike/ 

    https://www.plantemoran.com/explore-our-thinking/insight/2024/10/info-guide/supply-chain-resilience-lessons-from-the-latest-port-strikes

     

    Tags: logistics , supply chain

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