Gregory D. DeYong is an SIU Carbondale associate professor of operations management. (Photo by Russell Bailey)
September 26, 2024
SIU logistics expert: Possible dock strikes could have staggering impact on supply chain
CARBONDALE, Ill. — If the country’s largest maritime workers union goes on strike next week at ports along the Eastern Seaboard and Gulf Coast, nearly half of the nation’s imports would be without a path into the country, which could cause supply chain disruptions reminiscent of the pandemic era, says Gregory D. DeYong, a Southern Illinois University Carbondale associate professor of operations management.
As its contract expiration date nears on Oct. 1, 2024, the International Longshoremen’s Association (ILA), which represents about 85,000 members, is preparing to go on strike, potentially closing 36 ports. JPMorgan analysts say a work stoppage could result in an economic impact of $5 billion daily.
“The U.S. imports approximately $3 trillion in goods each year, so the scale of this potential disruption would be truly staggering,” DeYong said. “Even a short strike could easily disrupt billions of dollars in trade. In addition, these ports handle a significant portion of U.S. exports, particularly to Europe, which would also be disrupted.”
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Gregory D. DeYong, associate professor of operations management at SIU Carbondale, can be reached at gdeyong@siu.edu.
Unavoidable impact
DeYong noted that nearly every type of product could be affected but imports of automobiles and exports of agricultural and manufactured products would likely be particularly hard hit.
“Unfortunately, U.S. exporters and importers don’t have many good options to avoid the impact of this potential strike for a number of reasons,” DeYong said. “First, there are no real options to avoid East Coast ports for transport, particularly for shipments between the U.S. and Europe. The cost of air freight is prohibitive, and the available capacity is low compared to ocean freight.
“Shipments to West Coast ports would be time-consuming, and therefore costly, and the West Coast ports don’t have sufficient capacity to handle even a small portion of East Coast freight, in addition to their existing traffic. Other North American ports, such as those in Canada and Mexico, can handle a portion of the freight, but rerouting to these ports would necessitate long overland journeys as well as customs issues.”
He noted that supply chain managers have been taking steps to mitigate the possible strike by expediting shipments to arrive before Oct. 1 if possible, and where possible, rerouting shipments. Ports have extended operating hours to overtime and weekends as well, but despite these steps, the effects have been minimal due to the high volume coming into these ports.
“The companies whose contingency plans allow domestic sourcing have a little more leeway, but such a large trade disruption will have widespread impacts,” he said.
Those impacts include product shortages, higher prices and delivery delays. Further compounding the situation is the approaching holiday shopping season.
What’s at stake
The heart of the labor-management disagreement is automation of port activities, DeYong said.
“Port management, represented by the U.S. Maritime Alliance, is keen to reduce costs and labor reliance by automating tasks such as unloading vessels and moving containers. The ILA is adamantly opposed to these efforts,” DeYong said.
Pay is also an issue in the talks, on which the two parties are reportedly nowhere near reaching an agreement. Meanwhile, the Biden administration has expressed an unwillingness to step in, even though the Taft-Hartley Act does grant the executive branch the ability to compel the longshoremen back to work, he said.
“As we have seen with recent rail strikes, there is a political price associated with strike breaking,” DeYong said. “In addition, the union has hinted at a potential work slowdown if the members were forced back to work.”
Also potentially exacerbating the situation, more than 700 dock foremen at the Port of Vancouver, represented by the International Longshore and Warehouse Union Local 514, are conducting a strike vote. The Freight Management Association and the Greater Vancouver Board of Trade say a dock strike there could shut down critical terminals on Canada’s west coast, resulting in trade disruptions.
DeYong has personal experience as well as professional knowledge in supply chain management. Before becoming a faculty member, he worked as an import/export manager, where he was responsible for about $100 million in products annually. DeYong is currently working to establish a Center for Supply Chain Management and Logistics within SIU’s College of Business and Analytics.