As dockworkers strike continues, experts weigh potential supply chain impacts

The situation remains at a stalemate following the first day of a historic strike by the International Longshoremen’s Association (ILA) at ports from Maine to Texas.

Thousands of ILA members joined the picket line as a midnight deadline passed Monday evening — with no deal reached between ILA and the United States Maritime Alliance (USMX), which represents the ports. The union is calling for a significant wage increase as well as assurances on automation at the port.

ILA President Harold Daggett joined members on the picket lines at Maher Terminal in Port Elizabeth and APM Terminals and Port Newark Contain Terminal Tuesday. The union says it intends for demonstrations to continue round-the-clock for as long as it takes for USMX to meet its demands for rank-and-file members.

“We are now demanding $5 an hour increase in wages for each of the six years of a new ILA-USMX Master Contract,” said Daggett. “Plus, we want absolute airtight language that there will be no automation or semi-automation, and we are demanding all Container Royalty monies go to the ILA.”

Opposing sides

Thousands of members joined in solidarity on picket lines at all the major ports on the Atlantic and Gulf Coasts. In a show of international solidarity, Bobby Olvera Jr., president, International Longshore and Warehouse Union, appeared with with Daggett and ILA Executive Vice President Dennis Daggett when the strike commenced overnight.

“When we fight, we win,” said Olvera. “Brother and Sisters, on behalf of all the members of the ILWU, from Alaska to San Diego, British Columbia, and most definitely from the Islands of Hawaii, the ILWU stand with ILA. We are family – WE ARE ONE!”

Meanwhile, USMX stood by its most recent offer and expressed a desire to continue bargaining.

“USMX is proud of the wages and benefits we offer to our 25,000 ILA employees, and strongly supports a collective bargaining process that allows us to fully bargain wages, benefits, technology, and ensures the safety of our workers, day-in and day-out,” USMX said in a statement updating the status of the negotiations on Oct. 1. “We have demonstrated a commitment to doing our part to end the completely avoidable ILA strike. Our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy.”

“We look forward to hearing from the Union about how we can return to the table and actually bargain – which is the only way to reach a resolution,” USMX closed its statement.

The state, region and country are bracing for the fallout, which would intensify as it drags on. As NJBIZ reported Tuesday, officials have prepared in anticipation of the shutdown.

Supply chain concerns

NJBIZ heard from sector and subject experts about the different ramifications and how they are adjusting to the disruption.

“We are in constant contact with our customers. As you would expect, many are still in the planning stages,” said Carter Andrus, chief operating officer, Prologis, a leader in logistics real estate, with facilities in New Jersey, New York, Savannah, Baltimore, and Florida. “We saw a rush to get as much product out of the port by Sept. 30, and we are working with customers to provide some overflow parking and storage areas to temporarily store inventory. Other customers are evaluating different options and will consider adjusting operations pending how the situation evolves.”

“This strike, which affects 36 ports and is the first by the union since 1977, threatens to disrupt the nation’s supply chain, potentially raising prices on various goods like food, toys and cars,” Robert Dowler, president, and Benjamin Lowe, immediate past president, said in a statement on behalf of The Association of Supply Chain Management Greater North Jersey Chapter. “The impact of the strike could be significant, potentially costing the economy up to $5 billion per day and causing delays in essential goods, especially as the holiday shopping season approaches.

The organization noted that the strike could also affect international trade and more.

“While some operations, like cruise ships and the transportation of certain fuels and essential goods, are expected to continue, the strike could lead to delays in shipments of items such as cars, fruits, and holiday merchandise, exacerbating supply chain pressures,” the statement closed.

Making plans

Kristin Pothier, KPMG US sector leader, Life Sciences, said that when it comes to the pharma industry, there are two points to consider.

“There is always a knee jerk reaction to say that any strike at a port will affect all aspects of every industry and could be very serious in life sciences especially for therapeutics,” said Pothier, before introducing the topics. “Pharma is not an industry that is heavily reliant on shipping ports. The strike is not a surprise and has been on the horizon for a couple of years. Many companies have already done the work to reroute and build stock in whatever mitigation tactic is necessary.”

She said that the pharmaceutical companies and distributors have extensive risk planning teams that kick alternative plans into gear for situations like this.

“There may be periphery items (gowns, gloves, masks etc.) that could potentially impact the health care sector which ultimately may impact the overall Pharma/Life Sciences industry,” she added.

Ash Shehata, KPMG US sector leader, Healthcare, said that since the pandemic the health care industry has been preparing for supply disruptions and conducting ongoing reviews of supply chain resiliency between distributors and health systems.

“Many of these systems were put in place during the COVID-19 pandemic. Healthcare volumes are up post-pandemic so there is little room for error,” said Shehata. “These supply disruptions will drive more visibility of the existing issues in critical major hubs like NYC, the west coast, and other major metro areas. Additionally, health systems have already experienced high medical cost inflation – second to labor inflation driving reduced margins. Supply shortages will worsen this margin impact. Supply chain disruptions could eventually impact staff and patients adversely in an already fragile environment.”

This story was originally published in NJBIZ, a BridgeTower Media publication.

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