New Supply Chain Risk: West Coast Dockworkers

The critical supply chain for so many sectors has been severely disrupted due to the COVID-19 pandemic (including severe restrictions in China) and the Ukraine conflict. On top of these events, there may be more shipping delays with the West Coast Dockworkers’ contract expiring on June 30, 2022. This workforce covers more than 22,000 dockworkers at 29 ports ranging from Washington State to Southern California; and provides a primary gateway for goods shipped from Asia to the United States.

Contract negotiations began May 10, 2022 and will take place every day in San Francisco until a deal is reached between the International Longshore and Warehouse Union and the Pacific Maritime Association. If these take longer than expected, there will be a severe backlog in the west coast ports, which will affect the entire United States since these entrances to the US make up approximately 40% of domestic imports.

The common areas of hours, wages and working conditions will be discussed during these negotiations. However, one of the other likely topics will be the use of automation. The ports are at capacity, and workers are working tirelessly to keep the cargo moving; but with some automation, more cargo will be handled while keeping the jobs. Automation resources include stacking machines, yard tractors, truck gates and ship cranes which could help speed the process of container handling.

The summer season is around the corner, and companies are trying to find creative ways to navigate these challenges. Here are some ways companies are trying to avoid a supply chain backlog for their products:

  • Companies will look to pull any holiday season orders forward to get them in the port before July. Because these negotiations will occur during peak holiday merchandise shipping season, shipping earlier than normal will enable companies to possess their products for consumer consumption.
  • Companies will try and avoid the West Coast entirely by redirecting their shipments to other U.S. ports. Companies may opt to utilize harbors in Canada, the Gulf, East Coast, and Mexico and use air cargo. Certain big box distributors are even looking to lease an entire vessel to ensure the continuity of supply. These may be expensive options, but companies are doing whatever they can to keep their products on the shelf for the consumer.

With the contract expiration date approaching quickly, the hope is that initial negotiations will begin early and resolve in a reasonable time to avoid significant delays in the supply chain. Even with the alternative ways to avoid the west coast, delays are inevitable with any contract negotiations, so companies must keep adapting.

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Interested in learning more? Contact a member of our Manufacturing, Distribution and Logistics Services Team for further assistance.