The looming possibility of port strikes across the Eastern and Gulf ports of America is becoming increasingly concerning. With only 1 week until October, it’s still up in the air whether the strikes will go ahead. But one thing is for sure, if the strikes become reality there will be devastating impacts to supply chains.

The International Longshoremen’s Association (ILA) which represents 45,000 dock workers amongst ports between Texas and Maine have threatened to walk off the job on October 1st. This will all come about if a contract cannot be agreed upon with the United States Maritime Alliance (USMX) of shipping companies by the deadline of September 30th.

As a result of these rising tensions, businesses are bracing for significant disruptions as analysts predict that it could take anywhere from 4-6 days to clear a backlog of shipments from a 1-day strike. So, imagine the impacts of a longer-term strike 😳

This blog will explore the potential port strikes, the likely causes, and how these labor actions could ripple through the supply chain. We’re going to shine a particular focus on how these strikes would affect the trucking industry and the broader economy.

Rising Tensions Leading To The Potential Port Strikes

US ports play a crucial role in the global supply chain, handling the majority of freight entering and leaving the country. However, recent job disputes between dock workers, unions and port authorities have escalated, which is heightening the risk of port strikes.

These disputes are centered around wages, the use of automation, healthcare and working conditions. Workers that are being represented by unions such as the International Longshore and Warehouse Union (ILWU) are arguing that they deserve better compensation and job security. This comes from the growing concern about the rise of automation in ports, and a fear that this will lead to job losses in the future.

However, these strikes would come at a pivotal time. As the port of Baltimore and surrounding areas are still recovering from the devastation of the collapse of the Francis Scott Key Bridge, which some supply chains are still reeling from. Along with peak seasonal shopping demand around the corner.

Impact On Supply Chains If The Strike Goes Ahead

Port strikes of this magnitude would have a huge impact on global supply chains. But in particular to industries and businesses that utilize and rely on just-in-time inventory systems. As a result, the impacts we see might look like substantial delays and bottlenecks across multiple industries like retail and manufacturing as materials and products will simply become stuck, either on ships waiting to be offloaded or waiting to be shipped out of the US.

Import & Export Delays

Ports across the globe handle around 90% of goods traded globally, and the ports around the USA contribute a substantial portion of that figure. Any sort of slow down in work, will result in a backlog of goods needing offloading or shipping out. Essential raw materials like steel, aluminium, and other manufacturing component delays could lead to delayed production schedules.

Likewise, delays in imported electronics, clothing, appliances and other consumer goods could mean bare shelves during peak holiday shopping season. While exports of agricultural or automotive for example could result in missed sales opportunities.

Inflated Costs

When goods are delayed or stuck in transit, costs inevitably rise. Businesses that depend on tight supply chains may need to source materials from alternative suppliers. Which are often more expensive or the other option is to pay hefty premiums to ensure their goods are prioritized when ports reopen. These inflated prices are usually passed down the supply chain and eventually reach the consumer in the form of higher prices.

Even companies that are able to absorb these increased costs in the short term, the long-term financial impact could be significant, particularly if strikes persist for weeks or even months.

How Will It Effect The Trucking Industry?

Trucking companies across the USA work closely with and are deemed a critical link between US ports and the rest of the country’s supply chain infrastructure. Domestic trucking companies are responsible for transporting cargo from ports to warehouses, distribution centers and final destinations. Therefore, any disruptions at the ports will have an immediate affect on trucking companies that rely on steady volumes of freight from ports.

Reduced Freight Volumes

With freight being stuck on ships and not offloaded by the port workers, truck drivers will have fewer loads to transport. This will result in decreased revenue for the trucking companies. Especially ones that specialize in drayage, which is the transport of goods over short distances from ports to nearby destinations.

Not only drayage specialists will suffer, long haul trucking companies will feel the ripple effects too. Fewer imports getting through the ports means fewer goods to move across the country, reducing demand for their services. This can become a huge problem for smaller operators who might not be able to weather a slowdown.

Congestion & Bottlenecks

On the opposite end, after the slow down comes another hurdle for transportation companies, in the form of surges in demand due to backlogged freight finally making its way through the port, ready for its next leg of its journey.

Trucking companies will be required to deploy more drivers and trucks to clear the backlog as quickly and efficiently as possible. This will lead to higher operational costs and will put further strain on an industry that’s already dealing with a driver shortage.

Broader Economic Implications

The effects of the port strikes won’t just stop at supply chains. They will have far reaching effects on the broader economy. Manufacturing output will slow, exports will decline and inflation could rise due to the scarcity of goods and increased transport costs. A strike of this level could see ripple effects way into 2025.

How Can We Prepare For The Potential Disruption?

Although it’s still not certain wether the port strikes will definitely go ahead in October. The mere possibility does highlight the fragility of US supply chains. So, to stay ahead and prepared, businesses from retailers to manufacturers need to start putting contingency plans in place now to try and mitigate the effects a strike could have as much as possible.

Partnering with reliable transportation providers, building up inventory levels and diversifying suppliers can help companies to navigate the uncertain times ahead.

Contact PEI for help navigating domestic transportation during port strikes 

At PEI we’re experts in dealing with specialized freight under pressure and can handle yours with any custom requirements.