Dockworkers Strike Will Impact Supply Chains and the Economy

Ramifications from the East and Gulf coast dockworkers strike are expected to be felt across supply chains, likely impacting availability of goods and materials, lead times, shipping costs and retail prices, and perhaps even causing inflation and disruption to holiday peak season.

“Shortages could lead to increased prices of goods as well as inflation on a larger scale,” said Darin Miller, Houston area-based national director, marine, at Sedgwick, a global claims administrator. “The affected goods are wide-ranging, from automobiles, food products, and oil and gas to consumer goods. Basically, anything could be impacted because it is all a part of our international supply chain.”

The strike — the first since 1977 — impacts 14 ports along the East and Gulf coasts, from Maine to Texas. It began at 12:01 a.m. ET today, when around 45,000 members of the International Longshoreman’s Association (ILA) walked off the job. Eleventh-hour efforts with ports ownership to reach an agreement were unsuccessful.

The union seeks higher wages and “a ban on the automation of cranes, gates and container-moving trucks” used at 36 U.S. ports to unload and load freight. The “last ditch” efforts by the United States Maritime Alliance reportedly included an offer of a nearly 50-percent hike in wages over six years.

Around 100,000 shipping containers “will be stranded on the docks at the Port of New York and New Jersey for the duration of the strike,” according to New York state officials, as reported by The Washington Post. 

In addition to Miller, Inside Supply Management^® Weekly connected with other subject matter experts, who provided email answers to a range of questions about the strike and potential disruption. Here’s what they said:

Question: What are the supply chain implications from the strike?

Miller: “As a result of this strike, anything coming into the East Coast or Gulf Coast ports could be delayed until the strike is resolved or the goods are re-routed to another port, possibly on the West Coast or port terminals that use non-union labor. If ships are being re-rerouted to, say, Long Beach, there will still be significant delays, as there would be a backlog of ships waiting to be berthed and discharged at the new port, on top of the added sailing time and likely wait time at the Panama Canal.”

Michael Watt, Miami-based regional managing director of integrity due diligence for Latin America at Kroll: “If the strike lasts longer than a week, we will see upstream impacts at exporting ports in Asia and Europe that need to hold containers — this will drive up shipping costs further in a similar way that we saw during pandemic-era port congestion.”

Also, “Given the timing of the strikes, there is a greater impact from disruptions in the delivery of goods, leading to potential shortages and delays. During this time of year, imports spike due to the increase in seasonal shopping.”

Carrol Hand, maritime and international trade attorney at Washington, D.C. law firm Holland & Knight: “(S)hippers and consignees will collectively face a wide array of impacts. Beyond the obvious increased challenges moving cargo in and out of the U.S., shippers and consignees may well be advised of a risk in detention and demurrage charges being invoiced both during and in the aftermath of the strike. The duration of the strike would likely have a direct impact on the prevalence and magnitude of these types of charges being invoiced.”

Q: What strategies can companies use to mitigate or minimize the impacts of the strike?

Miller: “There’s not much can be done for goods already in transit besides hope and wait. For future shipments, companies should try to route through open ports, which could cause an increase in shipping costs.”

Watt: “Companies can turn to alternate modes of transportation, such as air freight, to deliver their goods. However, this option is likely to be more expensive and may not be feasible for most goods transported by sea. Another strategy companies have used is to import goods via West Coast ports, which will similarly lead to bottlenecking and higher demand-driven costs. Companies also (could have prepared) for potential disruptions by stockpiling inventory in advance of the strike.”

Sara Saberi, associate professor of operations and industrial engineering at Worcester Polytechnic Institute in Worcester, Massachusetts: “To mitigate the impact and keep goods flowing, several logistical steps are typically taken. One immediate measure is rerouting cargo to alternative ports, either within the U.S. or internationally, to avoid bottlenecks at the affected locations. This might include shifting shipments to other ports or relying on inland distribution centers with intermodal capabilities. Additionally, businesses may resort to air freight for high-value or time-sensitive goods, although this is more expensive and limited in capacity. Rail and trucking networks play a critical role during port strikes, as they can move goods from inland hubs to their final destinations, bypassing the affected areas.”

Q: How will consumers be impacted?

Miller: “Shortages could lead to increased prices of goods as well as inflation on a larger scale. The affected goods are wide-ranging, from automobiles, food products, and oil and gas to consumer goods. Basically, anything could be impacted because it is all a part of our international supply chain.”

Saberi: “The holiday period is a critical time for the U.S. economy, with retailers heavily relying on smooth and timely shipments to meet increased consumer demand. Prolonged strikes across key U.S. ports would exacerbate the strain on supply chains, leading to significant delays in the availability of goods such as electronics, toys, and clothing, which are in high demand during this period.” 

Q: If the strike prolongs, what are long-term ramifications?

Saberi: “In the long term, prolonged or widespread port strikes across multiple U.S. ports would erode business confidence in the country's supply chain reliability and reduce the overall competitiveness of U.S. ports in the global market. The broader economic consequences could extend to slower GDP growth, higher inflation, and long-term disruption in industries like automotive, electronics, and retail, where reliance on imported components is high. Additionally, persistent port disruptions could damage U.S. trade relationships, impact employment in port-related industries, and create ripple effects across entire sectors of the economy.” 

Q: What other issues could have an impact?

Miller: “Once the strike is over, it’s important to remember that there could still be delays as the backlog of ships at the ports wait their turn to be discharged.” 

Hand: “For shippers and consignees that import or export cargo from the U.S. East Coast, it is important to understand the applicable detention and demurrage policies and procedures for any ocean carriers moving their cargo. An understanding of these policies and procedures, along with the relief and assistance available before the Federal Maritime Commission if invoiced charges are believed to be unreasonable, can be very helpful when navigating a potential industry disruption of this size.”

Watt: “It is important for companies to stay informed and be proactive in their approach to managing the impact of the port strikes on their supply chains — like many already have with advance planning. Communication with suppliers and customers is also key to managing expectations and minimizing disruptions.”

Q: Hurricane Helene also has created havoc along the East Coast. What supply chain disruption has it caused? And what actions should organizations take?

Miller: “Regarding Hurricane Helene, the disaster has resulted in not only delays, but possible significant shortages of goods that were being stored in warehouses that sustained flooding.

“Companies should have any possibly affected goods inspected and work with their insurer(s) to handle any damages. They should have as much documentation and evidence available and submitted as soon as possible to their insurer(s) so that a claim can be quickly resolved, and operations can hopefully become a bit smoother in the coming weeks.”

(Photo credit: Getty Images/Ultima Gaina)