Port strikes are a major concern for global supply chains, especially in the U.S., where East and Gulf Coast ports handle around 40% of the nation’s cargo volume. Prolonged strikes can disrupt trade, delay shipments, and impact consumer markets.
These strikes often stem from wage disputes, contract negotiations, or working conditions, leading to significant delays in cargo movement and logistics.
For shippers, retailers, and consumers, the effects include delays, higher costs, and inventory shortages. In this article, we’ll explore the causes, impacts, and strategies for managing supply chain risks during port strikes.
Understanding the Role of Port Strikes in Supply Chain Disruptions
A coast port strike can have profound effects on supply chains, particularly at key East Coast ports and West Coast ports. The East and Gulf Coast ports handle a substantial portion of the nation’s imports and exports. When dockworkers—often represented by the International Longshoremen’s Association (ILA)—enter disputes over wages or working conditions, the risk of a work stoppage increases. If a tentative deal is not reached, a strike lasting several days or longer can occur, leading to significant dock congestion and impacting operations from Maine to Texas.
The United States Maritime Alliance (USMX) plays a crucial role in negotiating agreements to prevent these strikes. When negotiations for a deal on wages stall, the risk of a shutdown grows. For example, during the pandemic, delays in reaching agreements caused major disruptions, and it took considerable effort to return to the bargaining table. Because there is always a possibility for wage dispute,, stakeholders are closely monitoring labor dynamics to avoid potential backlogs and shortages of essential supplies.
As of January 8, 2025 labor negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) are ongoing, with the current contract set to expire on January 15, 2025. The primary point of contention remains the implementation of automation technologies at ports, which the ILA opposes due to concerns over job security.
How Port Strikes Lead to Port Congestion and Delays
When a coast port strike occurs, the efficiency of ports is immediately compromised. Dockworkers and longshoremen handle the critical tasks of loading and unloading containers from cargo ships. Their absence results in severe dock congestion and delays, especially at major hubs like Los Angeles and Long Beach. These West Coast ports are critical gateways for goods from Asia, processing millions of containers a month. A picket line can quickly create a backlog, delaying shipments for weeks or even months and disrupting the entire shipping network.
Perishable goods, such as food and pharmaceuticals, are particularly vulnerable during a strike. Delays can cause spoilage, leading to financial losses for shippers and retailers. High-demand goods during the holiday season are also severely affected, leaving shelves empty and customers dissatisfied. The economic impact of these delays extends beyond the affected ports, causing widespread disrupted shipping and impacting supply chains nationwide.
Logistics Challenges Stemming from Port Strikes
A port strike creates widespread logistics challenges that disrupt the entire supply chain. From delays to increased costs, shippers and retailers must navigate multiple issues to maintain operations and efficiency.
Delays in Transporting Cargo
When a port strike occurs, shippers experience immediate delays in transporting cargo. These delays lead to product shortages and increased shipping costs. Companies that rely on East and Gulf Coast ports may need to reroute shipments to alternative ports, such as the Port of Baltimore or smaller offshore hubs. This sudden shift strains infrastructure reduces efficiency, and contributes to further dock congestion.
Rerouting Shipments to Alternative Ports
To cope with a coast port strike, shippers often need to find alternative routes and ports. For example, when East Coast ports face disruptions, rerouting cargo to ports like the Port of Long Beach becomes necessary for shippers who want to make sure their inventory isn’t affected by strikes. However, this rerouting can overwhelm alternative ports, leading to additional delays, extended dwell times and logistical bottlenecks.
Increased Operational Complexity
The uncertainty of labor disputes complicates supply chain planning and risk management. Shippers must develop contingency plans, such as securing additional carriers and identifying backup routes. Even a three-day strike can force adjustments, diminishing competitiveness and increasing logistics challenges for all companies and consumers.
Impact on Retailers and Brand Loyalty
Retailers face significant risks during a port strike. Delays in cargo transport can lead to inventory shortages, particularly during critical periods like the holiday shopping season. Empty shelves can damage brand loyalty as customers turn to competitors who can meet demand. Maintaining consistent inventory levels is essential for sustaining customer trust and market share.
Mitigating Risks from Disrupted Shipping Networks
To effectively mitigate risks associated with port strikes and disrupted shipping, shippers should adopt proactive strategies. Here are key approaches:
1. Diversify Port Options
- Reduce reliance on a single port by using multiple ports to ship product along the West, East, Gulf coasts and Canadian ports to offset risk of inventory getting delayed.
- Utilize air freight to import emergency items
- If the port workers do strike and inventory is affected, communicate proactively with customers so that they can plan accordingly.
2. Advance Planning for Peak Seasons
- Build inventory ahead of time for periods like the holiday season and known labor contract negotiation windows.
- Establish relationships with alternative ports to prepare for potential dock congestion. For example, there are several non-union and joint union / non-union ports that may still operate such as Jacksonville, FL, Wilmington, NC, and the Port of Savannah, GA. However, many of these ports are refusing to take on additional volume and only work with shippers who have been utilizing the port historically.
3. Strengthen Supply Chain Resilience
- Develop a comprehensive supply chain risk management plan.
- Regularly update contingency plans to adapt to changes in the shipping network and mitigate disrupted shipping.
The Role of the Maritime Alliance and Labor Negotiations
The United States Maritime Alliance (USMX) plays a pivotal role in preventing port strikes by negotiating with dockworkers and longshoremen. Reaching a fair deal on wages and working conditions is essential to avoid coast port strikes and maintain operational stability. These negotiations have major implications for East and Gulf Coast ports and supply chains nationwide. In extreme cases, intervention under the Taft-Hartley Act may be required to resolve disputes and keep docks open.
Partner With Supply Chain Solutions to Create a Resilient Supply Chain
Don’t let port strikes, congestion, and shipping disruptions derail your business. With the right strategies and support, you can maintain a resilient supply chain and ensure smooth operations, even during unexpected challenges.
At Supply Chain Solutions, we offer expert supply chain risk management, logistics planning, and mitigation strategies to keep your operations running smoothly. Whether facing potential coast port strikes or labor disputes, we provide the tools and support you need.Contact us today for a consultation to safeguard your business against future disruptions.
