Imports of U.S. container cargo in August jumped 12.9% from a year ago as a summer volume surge delayed cargo at major ports, according to a Reuters article.
A potential strike also threatens to disrupt supply chains at a scale not seen in years, with the power to delay shipments, drain inventory and spike costs — all at a time when consumers expect seamless service.
The International Longshoremen’s Association (ILA) represents 45,000 dock workers at three dozen U.S. ports from Maine to Texas and handles almost half of the nation’s ocean trade. ILA stated in early September that its members are prepared to hit the streets if they do not have a new contract with the United States Maritime Alliance (USMX) employer group in place when the current six-year agreement expires on September 30.
“A key concern dockworkers have in the negotiation is that automation will replace their jobs,” says Seth Skiles, founder of IO Law. “For example, an automated gate at a port in Mobile, Alabama allows trucks to enter into port facilities without human assistance. Additional automation in East Coast ports may eventually cause their jobs to go away.”
The Potential Impacts of a Strike
With the East Coast longshore contract deadline fast approaching, the stakes have never been higher for businesses. More specifically, those that import raw goods or materials into East Coast ports.
“If you import raw materials or finished goods into East Coast ports, or another party does and then sells to you, you could potentially be impacted.” Skiles notes.
If you’re buying from a wholesaler or manufacturer that is stockpiling goods in a warehouse, it may not impact you as much since they’re prepared and can still continue to sell to you during the strike period, according to Skiles. But if you’re importing directly from overseas, it is time to prepare against any delays and try and get your goods or raw materials from other routes, such as West Coast ports, Canada or Mexico.
Nearshore Manufacturing
Lately, more companies are beginning to turn to nearshore manufacturing for a variety of reasons. Not only is the shipping cheaper, but there’s less of a chance of delays, it’s easier to visit the manufacturing plant and communication is also easier, according to Jeff Walling, co-owner of ABM Equipment Co.
“Not only can you get responses back right away because of the time zone instead of trading messages day-by-day, but it’s much easier to find a Spanish-speaking purchaser than one who speaks Mandarin,” he says.
Probably one of the biggest drivers to manufacturing nearshoring, according to Walling, is that because of how much China has made from the last few decades, their labor is now more expensive than Mexico’s for some types of work. “We hear even China is outsourcing to them now,” he says.
Until additional news releases about the potential strike and with the holidays coming up soon, the best thing retailers can do to prepare is to stockpile inventory in advance.
“Build up inventory in your own warehouse, or make sure your third party warehouse can make extra space for your goods while you build up stock,” advises Skiles. “Try to minimize disruption as much as possible and allow sales to continue to your customers.”
