What Does US Port Strike Mean for Global Supply Chains?

Logistics and operations leaders are bracing themselves for the initial impacts of dockworker strikes at ports along the US East and Gulf coasts – with no resolution in sight.

Strikes at several major ports got under way on Tuesday (1 October) and are expected to hit supply chains in the US and beyond, with growing concerns about how long action will last and the extent of the damage.

Port operators have prepared for the seemingly-inevitable industrial action by extending hours and implementing special measures, particularly for refrigerated shipments, to reduce cargo losses. Ocean carriers have already introduced surcharges on shipments heading to East Coast ports.

However, now the strike has begun, disruptions are inevitable.

“Air cargo rates between China and North America have already been elevated to peak season levels for much of the year, largely driven by the high volume of e-commerce shipments," comments Judah Levine, Head of Research at Freightos Group. 

"With regular peak season demand expected to increase in October, along with the usual holiday-related e-commerce demand, air capacity and rates will face additional pressure. The strike will only worsen this strain on capacity.” 

The logistical challenge

Anticipating the strike, many companies have moved their peak season ocean freight shipments forward, but are still set to face considerable logistical challenges.

As the action unfolds, its duration will play a key role in determining broader effects. A short strike might cause a temporary backlog, but a prolonged one could have serious consequences.

Shippers may look to air freight to move essential inventory, but the high costs involved mean this will likely be a last resort.

Judah adds: “Air freight is often a reactionary option during supply chain disruptions, particularly for shippers that wouldn’t normally consider it and this current environment could make air freight capacity even more scarce and expensive.”

However, with peak season in full swing, companies may find it difficult to secure air freight space.

“Some shippers may want to switch to air freight but might struggle to find available capacity, particularly during peak season,” Judah continues. “Those who do manage to secure space will likely face much higher rates, especially in the spot market, since this wasn’t planned in advance with block space agreements.”

The possibility of government intervention remains uncertain. 

While US President Joe Biden has the power to suspend the strike for 80 days for further negotiations, there is little indication this will happen.

“There are no clear signs that a strike will be avoided," Judah adds. "The two sides involved haven’t had direct negotiations since June and there doesn’t seem to be progress toward an agreement.

“While it seems unlikely that the government will use executive orders to force workers back, they will likely be motivated to ensure the strike doesn’t last long, considering the economic and political implications.”

Christmas supply chains in jeopardy 

The timing of the strike poses a serious threat to festive supply chains.

With the holiday season fast approaching, retailers depend on smooth logistics to keep shelves stocked with toys, electronics and other high-demand goods.

Delays caused by the strike could lead to significant shortages and unfulfilled orders.

Judah warns: "With regular peak season demand expected to increase in October, along with the usual holiday-related e-commerce demand, air capacity and rates will face additional pressure. The strike will only worsen this strain on capacity."

This raises concerns that some seasonal goods, particularly those imported from Asia, may not arrive in time for the Christmas rush.

Retailers that didn’t prepare by stockpiling could struggle.

Alexander Style, GM, Americas at Vinturas, says: "Savvy retailers will have been preparing for any delays by stockpiling weeks in advance to ensure they are well buffered should any supply chain delays occur. But, given lead times on globalised supply chains, anyone looking to move now will likely be too late."

The strike could also result in higher prices for popular Christmas gifts, as shipping costs increase and goods become scarcer. E-commerce orders, already stretched during the holiday period, could face even longer delays, leaving consumers frustrated by late deliveries.

Retailers that rely on just-in-time (JIT) delivery systems will be especially vulnerable to these disruptions, potentially missing key sales opportunities in the critical weeks leading up to Christmas.

Learning from past supply chain challenges

The Baltimore bridge collapse earlier this year highlighted the potential effects of logistics disruptions, but the ongoing strike is poised to create much larger challenges.

While the Baltimore incident was relatively contained, the East Coast-wide strike is far more complex.

Judah discusses the potential fallout: “Initially, vessels already en route to East Coast ports will likely sit idle while waiting for a resolution.

"New bookings might be diverted to other regions, with some carriers considering offloading in Mexico or the Caribbean to use those locations as transshipment hubs until the cargo can be moved again—possibly to the West Coast or elsewhere.”

However, fully diverting traffic to the West Coast isn’t feasible, as those ports lack the capacity to handle the East Coast’s volume. 

West Coast ports are, however, better prepared than they were during the pandemic, when container yard congestion was a major issue. Lessons learned from that period, such as the use of off-site warehouses and container storage, should help manage the increased volumes more effectively.

Sharing his overarching concerns, Alexander says: "The US port strikes are putting firms on edge. No one wants more US supply chain chaos – least not an administration preparing for an election just weeks away. Estimates show that the strike could end up costing the US economy US$5bn a day.”

Alexander emphasises the risks companies face when relying too heavily on single vendors and transport modes. “Businesses can’t afford an ‘all eggs in one basket’ approach when it comes to their supply chains. Supply chain disruption is not a ‘one-off crisis’ but the ‘new normal’ of business life.”

Mike DeAngelis, Senior Director of International Solutions at FourKites, notes: “This trend is consistent with the front-loading of cargo that we've seen all summer as shippers prepared for the strike.”

Clearly, logistics leaders are grappling with a host of serious challenges, as the strike’s outcome remains unclear.

In the long term, the strike highlights vulnerabilities in global supply chains. Companies heavily reliant on single routes or vendors may be forced to rethink their logistics strategies and develop more resilient supply networks.

Disruptions from this strike are not just a short-term challenge but a reflection of ongoing supply chain instability, signalling a “new normal” where companies must be prepared for future upheavals.

Ultimately, the strike means delays, higher costs and potential shortages across global markets, making it clear that supply chains remain fragile in today’s interconnected world.

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