A second East and Gulf Coast port strike was averted when the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) struck a deal on a new contract last week. Although the strike was avoided, there are valuable lessons to be learned from the experience.
Even without a port strike, supply chain risks stemming from a variety of other sources will persist throughout this year. An early Lunar New Year, ongoing turmoil in the Red Sea, talks of new tariffs, the risk of severe weather events, and the reshuffling of major ocean carrier alliances all have the potential to disrupt vessel schedules and shipments.
To navigate these volatile times, here are three lessons learned from the averted U.S. port strike and the strike in October 2024, that may help shippers more proactively plan for and respond to future disruptions.
1. Don’t settle for simply reacting to disruption
Disruptions are a constant threat to supply chains, and today’s more sophisticated shippers are less willing to simply respond reactively as they may have been in the past. Not only are shippers gaining greater visibility and control of their supply chains upstream to reduce the impact of disruptions, but they’re also actively jumping at opportunities to get in front of disruptive events.
For instance, some shippers prepared for a potential second port strike this month by keeping in place the changes they made to divert freight to the West Coast for the first strike. And some of those that had reverted shipments to the East Coast after the first strike worked with logistics partners like C.H. Robinson to either switch those shipments back to the West Coast or develop a hybrid strategy.
Issues that arose during the first strike were also addressed in anticipation of a second strike. For example, during the October port strike, increased shipments to the West Coast resulted in many rail cars traveling from the West Coast to the East Coast. But then they simply sat unused on the East Coast because there wasn’t enough demand to send them back to the West Coast. This time, as a second strike loomed, the industry made sure equipment was in place to support another rail-car imbalance.
2. Make risk mitigation a logistics task
While a strike can at least be planned for, most disruptions don’t play out on a schedule. Unexpected events, like geopolitical tensions, a bridge collapse or a rapidly developing weather, can create significant delays at a moment’s notice.
What’s more, the delays caused by disruptions don’t just impact a company’s inventory—they can create costly ripples across a business. A prime example of this is in the automotive industry, which relies on just-in-time inventory. If parts aren’t available on the plant floor when they’re needed, it can create a line-down situation that can cost an automotive OEM millions of dollars.
Because supply chain performance is now a major risk issue, logistics professionals must keep risk mitigation top of mind at all times. Since forecasting can be unreliable, shippers should work with a logistics expert with the necessary experience and presence to understand how their planning process can adapt to the needs of an unpredictable freight landscape and mitigate risks all year long.
In October, the ability to shift quickly was vital for shippers. As the port strike neared, one exporter had two reefer containers scheduled to exit the East Coast on a vessel from Savannah to Japan. But the vessel advanced its schedule by a full day out of concerns it would get stuck at the port. As a result, only one of the exporter’s containers was loaded onto the vessel, while the other container was stranded with no other option to exit the East Coast.
Our C.H. Robinson teams responded quickly by shifting the reefer container to rail. The container was then sent to the West Coast, where it was loaded onto a vessel and shipped to Japan. This helped the exporter avoid potential spoilage caused by the container sitting on the East Coast.
3. Make plans and execute strategically, not because of disruption
Contingency planning is not a new concept for shippers.
But today’s environment invites shippers to go beyond A, B and C-style contingency planning, and instead, create plans and strategically execute on them.
In the lead-up to a second port strike, for example, many shippers front-loaded freight to get in front of port closures. This activity showed shippers’ eagerness to plan and execute early to get in front of the disruption and not be susceptible to a potential large disruption.
To ensure over-ordering didn’t happen, like we saw following Covid, shippers didn’t simply double their Purchase Orders. They had strategic conversations about what commodities made sense to front-load, as well as how many, where, and when. To answer these questions, we helped our customers look through their entire supply chains and other market factors. The end-to-end visibility through combining our 3PL and 4PL solutions helps shippers go that extra step towards strategically mitigating disruptions.
Into the Unknown
The East and Gulf Coast port strike serves as a powerful reminder of the disruptive forces that shippers are up against and the importance of proactive supply chain management. By learning from and evolving with these disruptions, shippers can make their supply chains even more resilient and withstand whatever uncertainties the future holds for them.
Connect with a logistics expert to talk through strategies that are the right fit for your supply chain.
