What happens if the US ports keep closing?
Concern is growing as to what will happen to businesses around the country if the West Coast ports in USA continue to close for multiple days each week due to the International Longshore and Warehouse Union strike. Many businesses aren’t prepared for the potential supply chain disruptions that can affect their bottom line if they have trouble getting raw materials or finished products through the ports.
Dr Jeff Karrenbauer, President and Co-founder of Insight, said: “Companies need to have strategic plans in place to mitigate supply chain risks caused by everything from natural disasters to socio-economic and political unrest that may cut off critical raw material suppliers, sources of manufactured goods, major transportation facilities, essential transportation modes, and so on, resulting in major disruptions in supply chains.”
According to ISM, the West Coast ports handle 43.5 percent of containerised cargo in the US, which accounts for 12.5 percent of US GDP. Without an agreement between the Pacific Maritime Association (PMA) representing port management, and the ILWU, nearly 30 West Coast ports, which serve as the entry point of the bulk of Asia Pacific trade into and out of the US, could be shut down this week.
Kelly Kolb, Vice President of the Retail Industry Leaders Association, said: “A shutdown would not only impact the hundreds of thousands of jobs working directly in America’s transportation supply chain, but the reality is the entire economy would be impacted as exports sit on docks and imports sit in the harbour waiting for manufacturers to build products and retailers to stock shelves.
“The slowdown is already making life difficult, but a shutdown could derail the economy completely. For retailers specifically, a shutdown will have dire consequences for those dependent on spring inventory demand.”
The last prolonged port shutdown of the West Coast ports was the 10-day lockout in 2002, which was estimated to cost the US economy close to $1 billion a day.
Insight was founded by supply chain and operations research experts in 1978. The firm solves supply management issues of the world's foremost companies such as ExxonMobil and Nestle. For more information, please visit: http://www.insightoutsmart.com.
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