2023 could really be a bad year for Logistics related labor!
Let’s recap at a high level. The Railroad Unions are not happy that Congress legislated to keep them from striking. UPS workers have a contract coming up and they have voted to strike…if need be. The first of 4 major unionized LTL carriers, ArcBest Freight, also voted to strike, if need be. The dock workers on the west coast were working until recently without a contract.
All in all, it could have been a bad year for logistics if any or all of these various unions had decided to strike. UPS alone handles 6% of the US GDP, railroads handle 35% of the freight that moves, and the west coast ports handle more than half of the imports and exports coming and going from the US. So unionized labor in Logistics has a lot of clout.
What is some good advice to shippers? PLAN, PLAN, PLAN, and then PLAN some more. Be prepared to make moves to compensate for the loss of key Ports, carriers, and modes involved in your supply chain. Make sure that you understand the possibility of extended slowdowns.
Plan your alternatives if someone like UPS goes out on strike. Can you divert to FedEx? Will FedEx have the capacity to handle the load if UPS goes on strike? Do you want to be around to find out? Figure out how you would shift to other modes and carriers to allow yourself to continue to conduct business. If you are deeply embedded in parcel shipping, then you only have DHS (primarily int’l ships), FedEx, UPS, and the Postal System (USPS) as options. If UPS goes out, then you must make sure that you can even use another option such as FedEx. If you don’t have rates and relationships with either FedEx, DHL, or USPS, now may be a good time to start to get them in place. If you wait until the UPS strike is imminent, you’ve waited too long and will be out of luck. Also consider pooling your freight into larger shipments so you can utilize LTL, FTL, or Pool distribution options. Talk to your customers and see if they are planning for any changes should the UPS worker’s strike. See if they are willing to order in larger quantities or use longer frequencies between orders to help compensate.
If you are a rail shipper, you’re not in immediate danger unless the railroad unions decide to stage a wildcat strike. Although this is a possibility, it’s not a strong one…yet. Your modal alternatives may be limited, depending on what products you ship. If trucking options are available, then you need to plan on how you would divert tonnage to truck or use intermodal to get past any work stoppages or slowdowns on the rails.
If you are an importer or exporter and rely on the west coast for a large portion of your containerized moves (bulk also) then you need to take a hard look at diverting tonnage into or through the east coast, since it won’t be affected. Although this may impact you in terms of both cost and transit time, it’s an easy tradeoff against doing nothing and getting caught with your pants down. Now is the time to set up a (more) risk tolerant logistics network that utilizes both sides of the nation to ship or receive product. There has already been a (strong) migration to the East coast because of the pandemic and the shortages it produced.
If the unionized LTL carriers such as ArcBest, go on strike, that will have an impact on the availability of LTL carrier capacity. If you are a heavy user of unionized LTL, especially ArcBest, then now is the time to look at alternative carriers, get the relationships going and rates and services in place. Remember that this is a game for minimizing risk profiles to your supply chain. You can’t do business if you can’t ship and receive products.
If any or all of the above come to fruition, commercial transportation will be impacted. In some cases, this impact will be large, in others it may not hurt you too badly. Let’s remember a couple of things. Logistics is a system with a network. When parts of the network get disrupted the rest of the network suffers too. If rail capacity is negatively impacted, it will influence truck capacity and availability. Same holds true for import-export container activity. If the west coast shuts down, then the network is thrown out of kilter and the impact (pain) telescopes through the entire system. As a result, trucks aren’t where they used to be and can’t get where they needed to go, so the chain breaks down.
I cannot stress enough how impactful the above companies, organizations and modes are to our logistics network and your ability as a shipper to conduct business. You must start your planning cycles now, before it is too late to really do anything but suffer the consequences.
One strong, viable option is to partner with a 3PL, third party logistics company, that can bring a variety of options to the table for you to use. Not only do 3PL’s have a variety of solutions, but they also usually have options that won’t break the bank.
Riverside Logistics is one of these 3PL options. We have been helping our clients navigate the nuances of the logistics market for over 25 years and we would be happy to sit down with you and map out a strategy to compensate for the potential labor issues headed your way. If you would like to speak to one of our Logistics Consultants, call us at 804-474-7700 Option 4.
Remember the mantra: PLAN, PLAN, PLAN!!