A strike by longshoremen (ILA) on the US East Coast and Gulf Coast could have a significant impact on your supply chain. Not a good one.

The ILA, with upwards of 85,000 members has persistently opposed automation efforts at the east and gulf coast marine terminals. Current negotiations have stalled, and a potential strike threatens to result in delayed deliveries and increased freight rates and overall logistics headaches.

Here are some points to consider:

• ILA’s six-year contract with port terminal operators and ocean carriers on the East Coast expires September 30. However, the ILA has been less likely in the past to strike than their ILWU, West Coast union counterparts.
• The ILA president wants a good economic deal for his members that includes opposition to automation and exclusive port contracts.
• The union is tackling local issues first ahead of the master contract. New York/New Jersey and Baltimore have already reached tentative local agreements.
• Most of the “heavy lifting” in the contract negotiation workload is at the local level.
• Shipments have already been rerouted due to the Panama Canal drought restrictions and Red Sea hostilities.
• The East Coast ports gained cargo volume due to the massive vessel congestion and labor strife at West Coast ports during 2021-22 ILWU slowdowns.
• All East Coast and Gulf Coast cargo is handled and moved by the ILA.
• ILA longshoremen get bonuses based on how many tons they process at their port so diversions can be financially painful.
• Currently, it looks like double digit diversion percentages have already taken place.
• East Coast ports have a history of resolving labor issues and finalizing new contracts ahead of a work shutdown, however, port labor battles in the U.S. have intensified over inflation and automation issues.
• The ILA recently canceled the talks with ports management after discovering that automated technology was being used at the Port of Mobile, to process trucks without union labor.
• There are 3 key issues hitting East Coast trade. One, Red Sea hostilities diverting ships on longer transits. Two, drought conditions at the Panama Canal restricting throughput. Three, recent spikes in container rates.
• This is the critical time of year for consumer goods coming to the U.S., and the delays associated with the longer transits, container shortages, and weather have increased logistical challenges.
• The current ILA contract has union members making a range of $20-$37 an hour. Insiders think the ILA is targeting an increase larger than the 32% that was negotiated by the ILWU in its new six-year contract.
• The ILA is also said to be looking to secure a generous bonus package. Pointing to the Great Lakes District Union, which secured a 40% increase in wages and benefits for its new contract. No definitive salary increase target has been made by the ILA.

Here are some recommended strategies:

• Speed-up volumes
• Plan contingencies
• Communicate with suppliers/customers
• Reroute to WC Ports

Diversify: add alternative suppliers, ports, carriers and modes.

Communicate:  Ensure customers and suppliers are aware ofpotential disruptions and plan accordingly.

Contingency Planning: Develop and update your plans with steps to be taken in the event of a strike. Identify alternative supply, inventory requirements, and prepare for potential delays.

Technology Utilization: Use tools to monitor and adjust the supply chain to changes in the logistics landscape.

CONCLUSION

A potential strike at the US East Coast ports could be challenging. If you plan for it and make the necessary adjustments in your supply chain, you can minimize or even eliminate any impacts. This can be accomplished by adding diversity to your supply chain and communicating up and down to your suppliers and customers. Also, by leveraging available technology you can provide the resilience necessary to operate effectively if a strike happens along the East Coast and Gulf Ports.