Restaurant supply chains are in potential peril as tens of thousands of port workers went on strike early Tuesday across the East Coast and Gulf Coast over a wage contract dispute.
At the center of the conflict is the International Longshoremen’s Association (ILA), the country’s biggest longshoremen’s union. Roughly 50,000 of its 85,000 members walked off after midnight Tuesday when the union couldn’t reach an agreement on pay increases and use of automated technology, according to CNBC News.
The media outlet reported the economy would be impacted by hundreds of millions of dollars per day if the port strike extends further. A weeklong strike could strip the economy of nearly $4 billion, according to The Conference Board, a nonprofit research organization. CNBC said all 14 ports combined handle $3 trillion annually in U.S. annual international trade.
“Now you start to realize who the longshoremen are, right?” ILA union president Harold Daggett said to Fox News. “People never gave a sh**t about us until now when they finally realized the chain is being broke now. Cars won’t come in. Food won’t come in. Clothing won’t come in. Do you know how many people depend on our jobs? Half the world. And it’s time for them and time for Washington, to put pressure on them to take care of us. Because we took care of them, and we’re here 135 years and brought them to where they are today and they don’t want to share.”
New York Gov. Kathy Hochul said it was the first large-scale eastern dockworker strike in 47 years.
Fourteen ports have been preparing for a strike, per CNBC: Boston; New York/New Jersey; Philadelphia; Wilmington, North Carolina; Baltimore; Norfolk, Virginia; Charleston, South Carolina; Savannah, Georgia; Jacksonville, Florida; Tampa, Florida; Miami; New Orleans; Mobile, Alabama; and Houston.
President Joe Biden said he would not interfere and that he doesn’t believe in the Taft-Hartley Act, which limits the power of labor unions.
Jerad Dennis, director of pricing at TA, says a short-term work stoppage should have minimal impact on the cost of goods. However, a prolonged work stoppage would likely cause the cost of goods to increase as manufacturers may be forced to source from different suppliers and/or switch transportation modes/providers.
“A prolonged port work stoppage, especially at major hubs, would severely exacerbate ongoing logistics challenges that have persisted since the pandemic era,” Dennis says. “During the pandemic, supply chain disruptions were marked by shortages of critical goods, inventory delays, and transportation bottlenecks. Long-term work stoppages at key ports could replicate these effects, triggering a ripple of network imbalances across various sectors.”
Dennis adds that many manufacturers and shippers have increasingly adapted their procurement processes, inventory strategies, and production planning in response to uncertainty caused by labor strikes and other disruptions. Many have also shifted to proactive measures, like pulling forward shipments to ensure they have adequate stock before potential strikes. By front-loading shipments, manufacturers aim to avoid potential delays, maintain product schedules, and mitigate risk of supply chain interruptions, Dennis says.
He recommends that businesses reach out to suppliers and determine whether they’ll anticipate impacts so they can seek other suppliers that may not be as affected.
“Businesses that don’t already have a supply chain disruption mitigation plan, should develop one that prioritizes supplier diversification,” Dennis says. “They may also want to consider how various suppliers could impact costs and model various pricing scenarios to see whether, and how, they would need to pass on additional costs to consumers.”
