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Shippers Rush to Find Alternatives as US East Coast Port Strike Looms
Shippers Rush to Find Alternatives as US East Coast Port Strike Looms LOS ANGELES/NEW YORK, Sept 25 (Reuters) – U.S. companies that rely on East and Gulf Coast seaports have been importing early, shifting goods to the West Coast, and even putting cargo on pricey flights to hedge against a threatened Oct. 1 strike that could jam supply chains and reignite inflation ahead of the U.S. presidential election.
As the threat of a potential strike looms over US East Coast ports, shippers across industries are scrambling to find workarounds to keep their supply chains moving. The possibility of disruptions at major ports like New York/New Jersey, Savannah, and Baltimore has businesses facing the real danger of shipment delays, inventory shortages, and cost increases. With time running out and no resolution in sight, contingency plans are quickly becoming a priority for supply chain managers.
The Stakes Are High
The US East Coast is home to some of the busiest and most critical ports in the country. These ports handle a significant portion of the nation’s containerized cargo, especially for the consumer goods, retail, and manufacturing sectors. A prolonged strike could paralyze inbound and outbound shipping, creating bottlenecks that ripple across the entire economy.
Recent labor disputes between port authorities and longshoremen’s unions have been ongoing, but the stakes have now escalated. The risk of a full-scale strike has increased uncertainty for shippers already dealing with lingering disruptions from the pandemic, rising fuel costs, and global geopolitical tensions.
Stranded Cargo, Soaring Rates
As of Saturday, there were 42 container ships scheduled to arrive at the Port of New York and New Jersey—one of the largest ports involved in the labor dispute—according to S&P Global’s maritime tracking service, Sea-web. Thirteen of the ships are scheduled to arrive after Sept. 30.
In August, the five largest ports on the East and Gulf Coasts processed about 24,766 40-foot containers of imports and exports, valued at $2.7 billion each day, according to John McCown, senior fellow at the Center for Maritime Strategy.
Incoming wine and auto parts from Europe are vulnerable. Rerouting those goods to the West Coast is challenging because it could require difficult-to-find transit through the Panama Canal, air freight, or other time-consuming or costly measures, logistics experts said.
Ports on the East and Gulf Coasts also handle roughly 75% of the bananas entering the United States, according to Jason Miller, interim chair of Michigan State University’s Department of Supply Chain Management. He added that it doesn’t make financial sense to reroute or fly in such low-value perishables.
The cost to send a 40-foot container from Shanghai to New York jumped to around $10,000 in July. Rates have since retreated but could spike again with a strike.
How Shippers Are Responding
In response, many shippers are scrambling to put alternative plans in place, hoping to minimize the potential fallout from a port shutdown. Here are some of the main strategies shippers are employing:
- Diversifying Entry Points: One of the most common responses is to divert shipments to other US ports, particularly those on the Gulf Coast and the West Coast. Ports in Houston, New Orleans, and Los Angeles are seeing an uptick in inquiries as businesses explore new entry points for their goods. While these alternatives can help, they also present new challenges, such as capacity limitations and potential congestion.
- Air Freight Options: For high-value or time-sensitive goods, many companies are turning to air freight as an emergency backup. While more costly, the speed of air cargo can help mitigate delays that might arise if a strike takes place. However, with capacity limited and demand rising, air freight may only be a viable option for specific types of cargo.
- Increasing Inventory Levels: Some companies are preemptively increasing inventory levels at domestic warehouses to buffer against potential delays. This strategy involves bringing in shipments ahead of schedule to avoid potential bottlenecks. However, it requires sufficient warehousing capacity and upfront capital to stockpile goods.
- Exploring Inland Transport Routes: Shippers are also exploring inland transport routes, particularly utilizing rail and truck networks to bypass the impacted ports. While this can alleviate some of the pressure, it can also lead to higher domestic shipping costs, especially if trucking capacity is already tight.
- Collaboration with 3PLs: Third-party logistics (3PL) providers have become invaluable in helping shippers quickly shift gears. Many companies are leveraging the expertise of 3PLs to coordinate alternative routing, warehousing, and last-mile delivery options in case the strike moves forward. Providers like ModusLink offer comprehensive supply chain solutions, including end-to-end logistics management, flexible warehousing, and real-time inventory tracking, allowing shippers to better manage disruptions and maintain business continuity. By partnering with 3PLs such as ModusLink, businesses can more easily adapt to unforeseen challenges while optimizing costs and efficiency.
Long-Term Impacts
Even if a last-minute agreement is reached and the strike is averted, the current uncertainty is a reminder of the vulnerability of global supply chains. Companies are being forced to reevaluate their logistics strategies, not only for short-term disruptions but also for long-term resiliency.
Some experts argue that the increased reliance on fewer, larger ports has left the supply chain more fragile. Moving forward, businesses may explore decentralizing their shipping routes and investing in smaller, regional ports or multi-modal transport solutions that offer more flexibility.
The potential strike is also another stark reminder of the labor challenges facing the logistics and supply chain industries. From truck driver shortages to warehouse staffing, the industry continues to face hurdles that could shape its future in the coming years.
Conclusion
For shippers, the looming East Coast port strike represents yet another critical challenge in an already volatile environment. While businesses are scrambling to put contingency plans in place, the long-term takeaway may be a reevaluation of how to build more resilient, adaptable supply chains that can better withstand disruptions. The next few weeks will be crucial, and whether or not a strike happens, the lessons learned will likely reshape the way goods move across the country for years to come.
If you’re a shipper affected by the potential strike, now is the time to consult with your logistics partners, evaluate alternative routes, and prepare for all possible outcomes. The road ahead may be uncertain, but proactive planning is key to navigating these turbulent times.
Bibliography
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Disclaimer:
Content is the opinion of ModusLink Corporation and is not intended to act as compliance or legal advice.