The National Industrial Transportation League said a survey of its members found they anticipate "significant disruptions in their supply chains in the event of work stoppages at East and Gulf coast ports stemming from a strike or lockout.
"These potential impacts are anticipated regardless of whether they move freight through the affected ports," the shippers' organization said.
A contract between the International Longshoremen’s Association, whose members handle nearly all general cargo in those ports, expires at the end of September. Negotiations have been stalled between the union and employers, though the ILA and employers, represented by the U.S. Maritime Alliance (USMX), have agreed to resume contact talks with the assistance of a federal mediator the week of Sept. 17.
The NIT League said a majority of the 60 or so members who responded to its survey said they have made contingency arrangements to keep their supply chains operational, with most indicating they would divert freight through West Coast ports and others increasing shipments in advance of Sept. 30. Shipping cargo through Canada and Mexico is seen as a last alternative.
Reporting on the results of the survey in its Notice
Monday, the NIT League said most of the members responding to its survey
“were not in a position to estimate losses (or additional costs)
resulting from a shutdown.” Those who did give estimates of losses or additional costs of $5,000 to $5 million per day, $5,000-$5.6 million per week, and $200,000 to $15 million if the strike lasts longer.
But Peter Gatti, executive vice president of the NIT League, said those costs reflected only the change in supply chain costs. The costs might be much higher if companies are forced to delay production or even shut down factories because of an inability to obtain parts or raw materials. Companies might also lose sales if customers look to suppliers from overseas.
Gatti noted companies may be more affected than in the past because of steps they have taken to reduce inventory and move to just-in-time production.
Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, said a survey of its members found many had contingency plans to deal with a potential strike, but most had not "pulled the trigger" on those plans until Aug. 22 when the ILA and USMX announced a breakdown in talks. - Chris Dupin