The International Longshoremen’s Association (ILA) represents dock workers at 3 dozen U.S. Ports along the East Coast and Gulf of Mexico. Those ports process about 40% of all U.S. ocean trade. Their current six year agreement with their employer group ends on September 30, and negotiations for a new contract are currently stalled amid threats of a strike by the ILA.
To put that in context, a rep for the second largest carrier container group involved recently stated that “even a one week shutdown could take 4-6 weeks to recover from, with significant backlogs and delays compounding with each passing day.” (Reuters, “Surge of imports to US continues as possible East Coast port strike looms.”, available at: https://www.reuters.com/markets/us/surge-imports-us-continues-possible-east-coast-port-strike-looms-2024-09-10/)
This, of course, doesn’t include the overall impact to nationwide imports if affected parties seek to reroute to other U.S. ports of entry, which would almost certainly cause serious bottlenecks at those ports.
With Q4 looming, these potential port strikes present importers with crucial decisions regarding inventory management during the most important sales season of the year.
Diversifying ports, building inventory, and even relying on air freight for backup are all options.
Regardless of how one decides to manage the situation, a strong relationship with a responsive 3PL can be key to successfully preparing for and navigating this potential storm.
A good 3PL can help by:
1.) Providing visibility
– Good decisions require good information. This means access to inventory levels and shipment history along with the status of all incoming and outgoing shipments.
2.) Absorbing increased inventory levels where required
– Some fulfillment centers develop difficult rules and convoluted billing structures around inventory levels and velocity, adding another layer of complexity and risk to difficult situations like this (hello Amazon FBA). Instead, companies need a cost structure that is straightforward and easy to calculate.
3.) Effectively communicating
– Good customer service requires direct access to a decision maker with the responsibility and authority to get the necessary answers and help when needed.
4.) Providing fast response times
– Especially in difficult inventory management times like this, a 3PL should be a smooth port in troubled waters, where incoming and outgoing shipments are managed in a timely and effective manner.
This is a critical time for businesses who rely on the international supply chain. Proactive planning and nimble execution of strategic measures will provide the ability, not only to survive, but also to outperform competitors should port strikes occur. Partnering with the right 3PL can be an essential element of that plan.