Port strikes in the US: what are the impacts on your supply chain?

The recent port strikes along the US East Coast and the Gulf of Mexico are causing major disruptions in global container logistics. With tens of thousands of dockworkers walking off the job, as much as 55% of US container throughput ground to a halt. This not only affects the US but has global implications.

The challenges of the strikes
At the heart of the issue are stalled negotiations between the International Longshoremen Association (ILA) and the US Maritime Alliance (USMX). For two years, discussions about wage increases and the degree of automation in the ports have gone unresolved. The strike itself is driven by demands for a 77% wage increase over six years and opposition to further automation of terminals. As a result, thousands of containers were left unprocessed daily.

Impact on the global supply chain
These strikes have far-reaching consequences, both locally and globally:

• Higher costs: The standstill at US ports has led to a shortage of containers and a rise in freight rates. This is driving up costs for shipping companies and their customers, affecting the prices of end products, especially in sectors reliant on raw materials and components from the US.
• Delays and supply issues: Dutch companies are feeling the impact, particularly in the import and export of critical goods such as chip machine components and automotive parts. These delays are causing operational disruptions and production issues, leading to a ripple effect across the supply chain.
• Alternative routes offer little relief: Ports in Canada and the US West Coast have limited capacity, making it hard to quickly find alternative routes. Additionally, rerouting adds extra costs and delays, putting companies in a difficult position.

Preliminary agreement: what does it mean?
A tentative deal has been reached between the ILA and the US Maritime Alliance, including a 62% wage increase over six years. The strike has been suspended until January 15th to allow further details to be ironed out. However, automation and job losses remain contentious issues.

While this is a positive step, uncertainty lingers. Companies must continue to prepare for potential disruptions and delays in their supply chains.

What does this mean for your business?
For each day the strike lasted, it’s estimated that a week will be needed to clear the backlog. This means the fallout from the strike could be felt for weeks, if not months. Companies that rely on just-in-time delivery, such as those in the high-tech industry, will be directly affected. For businesses in the agricultural sector, perishable goods stuck at ports could lead to significant losses.

How can you manage this?
At Akomar, we understand the importance of anticipating these challenges. We offer solutions to help minimize the impact of the strikes:

• Smart route planning: Using real-time data and advanced analytics, we identify alternative routes to ensure your shipments reach their destination as efficiently as possible.
• Cost-effective strategies: We constantly monitor market conditions to find the best options. Our analyses map out the additional costs of alternative routes, allowing you to make informed decisions.
• Risk management: We conduct comprehensive risk assessments to ensure you're prepared for potential disruptions. We keep you updated on possible threats and solutions.