U.S. Port Strike: Implications for Manufacturers

With the threat of a widespread port strike looming in the U.S., concerns are rising across multiple industries, including printing. If a strike occurs, manufacturing businesses could face significant challenges in the delivery of equipment and consumables entering the country through either East Coast or Gulf Coast ports. While a strike is not a certainty, all manufacturers, including those that convert and print labels, cartons, flexible package, and more, should prepare for its potential.

An article in the New York Times states that part of the dispute between port authorities and thousands of union laborers stems from the efforts of ports to automate some job functions. It is the goal of the International Longshoremen’s Association to protect existing jobs.

According to Stephanie Buka, government affairs coordinator for PRINTING United Alliance, “If East and Gulf Coast port workers strike on Oct. 1 as expected, the supply chain that the printing industry relies on will be thrown into disarray. The disruption could cause a real headache for the apparel community, since the majority of imported apparel comes through East Coast ports. It would also affect imports of aluminum lithographic printing plates, industrial printing machines, and other printed products. The significant backlogs, delays, and congestion will lead to increased costs for businesses and consumers. PRINTING United Alliance recently joined a coalition letter addressed to the Biden administration, imploring it to help forge a deal between the International Longshoremen's Association (ILA) and the United States Maritime Alliance. We will hope for the best, but recognize that print service providers may need to activate contingency plans.”

The lead sponsor of the coalition letter mentioned by Buka is Americans for Free Trade. As of September 26, 68 organizations have stepped forward to become signatories.

One industry-focused manufacturer, Ultraflex, released a customer advisory about the potential disruptions resulting from a strike. In its advisory, the company stated the following, “East and Gulf Coast ports handle approximately 43% of U.S. imports. A one-day strike could take five days to clear, while a week-long strike could lead to congestion lasting until mid-November. Recovery from significant disruptions could take 3-6 months, depending on the severity.”

According to an article in The Economist, just the potential of a strike is already changing behavior. It said importers, in an effort to stave off the effects of a long-term disruption, are rushing to clear containers already in port.

And the disruption of a strike would affect more than consumables – it would also affect delivery of equipment. According to Erik Norman, president at wide-format equipment manufacturer swissQprint America, “A port strike will have significantly negative impact on our business as well as our clients. Many customers are now seeking to have installations before the year end to take advantage of Section 179 tax credits, and delays may cause them to lose this opportunity. Airfreight is an option; however, that is a very high-cost burden on both us and our clients. The bottom line is that any port strike will have large financial and customer satisfaction burden on our business. “

A Matter of Timing

While there is never a good time for supply chain disruption, the wide-format segment, and other industries, are gearing up for year-end/holiday promotional campaigns. Slowdowns in the delivery of materials – and even equipment – would compress the time available between the present and the hard deadline of holiday season promotions. Scarcity of materials will drive up costs of available supplies, thus increasing production costs and affecting margins.

While the reality of a strike is not certain, its threat is enough to shake up supply chains. According to The Economist article, port backups are currently causing significant delays, resulting in materials being stuck in transit, and logistics companies challenged to move goods as needed. The Financial Times reported that industries are adopting mitigation plans to address increased freight costs – which would rise if the strike threat became a strike reality, or if port slowdowns worsen.

Being Prepared

Potential strategies for navigating supply chain issues will be very familiar to business owners and managers that struggled with supply chain issues after the 2020 COVID-10 pandemic. These include working with domestic manufacturers of products needed, or seeking relationships with suppliers less vulnerable to U.S. port shutdowns. Also, increasing inventory now in hopes it will bridge and disruption is an option, though that includes a higher outlay during a time when materials costs are rising.