How the West Coast Labor Dispute is Disrupting the Supply Chain

LDL Voice

As the U.S. West Coast labor dispute continues to drag on, supply chain professionals are feeling the ripple effects. After nine months of negotiations, the International Longshore and Warehouse Union and the Pacific Maritime Association have been unable to reach an agreement on a new labor contract. Though it looks like we may see resolution soon, there’s no denying the slowdown is having an impact on the entire U.S. supply chain system—and will continue to do so beyond the date of any agreement between labor and management.

Business has fallen sharply for the ports involved in the dispute. At the Port of Oakland, January imports were down 39 percent and exports were down 26 percent compared with the same month last year (The Wall Street Journal). With the West Coast ports handling almost half of all container cargo in the U.S., shippers, retailers, and transportation professionals closely tied to port activities have been hit especially hard. Those shipping perishable goods to overseas markets are seeing estimated losses in the hundreds of millions of dollars per week (The Maritime Executive).

The trucking and railroad industries are also feeling the pain as they continue to lose valuable time and money, often waiting for hours to pick up a load.In response, many retailers and manufacturers have been stockpiling inventory in warehouses, bypassing West Coast ports altogether, and moving goods by air when possible. These alternative options have been expensive and are putting a lot of stress on the “just in time” inventory scheme used by many supply chain networks (World Property Journal).

It’s important for supply chain professionals to prepare themselves with contingency plans to recover quickly from a major disruption like this and consider the ripple effects. While many supply chains do a good job preparing for internal risks having to do with supplier operations, making sure you’re ready for an external disruption can save a lot of trouble for your organization. Think of it as an insurance plan. Though preparing for low-probability events may be costly, making sure you have the necessary initiatives in place to be ready for an external disruption can help you avoid destruction of corporate performance in the future (IHS).

How has the West Coast port dispute affected your supply chain network? Contact us to find out how our team of managed transportation experts can help you with your challenges.

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