Labour unrest continues to threaten global supply chains

Despite recent resolutions in Canada and India, ongoing labor unrest continues to pose significant risks to global supply chains, particularly in the maritime sector.

While strikes at ports and other supply chain infrastructure are not uncommon and typically cause localised disruptions, the current situation is far more precarious. With the added pressures from the Red Sea diversions, any new strike action could lead to widespread ripple effects throughout the global supply chain.

Sea-Intelligence has highlighted the potential impact of such disruptions, noting that a single day of strike action on the U.S. East Coast could result in a six-day backlog to clear containers. If a strike were to last a week in early October, it might not be fully resolved until mid-November. A two-week strike could disrupt operations into 2025, exacerbating the already strained supply chain environment.

Strike Resolutions

Canada:
The Canadian government intervened swiftly to end a rail strike that began on August 22nd, forcing Canadian Pacific Kansas City (CPKC) and Canadian National (CN) back to work. Concerned about the impact on the North American economy, the government mandated binding arbitration with the Teamsters Union to resolve the dispute. The Canada Industrial Relations Board extended expired collective agreements until new ones are signed. While the union accused the carriers of manipulating the situation, the immediate threat to the supply chain was averted.

India:
In India, fears of a nationwide port strike across 12 major ports were alleviated when the government agreed to wage enhancements and additional benefits for approximately 20,000 port workers. The strike, set to begin on August 28th, was called off after the new wage accord was reached. Union leaders acknowledged that the threat of a strike was crucial in achieving the agreement, which averted significant disruption during the peak export season.

Strike Threats

Germany:
In Germany, the threat of further strikes at major ports looms as the trade union ver.di rejected the latest collective agreement offer from the Central Association of German Seaport Operators (ZDS). With the contract expired, periodic warning strikes have already occurred in key ports, including Hamburg and Bremerhaven. Ver.di is urging ZDS to return to negotiations with a more substantial offer, raising concerns about potential disruptions if an agreement isn’t reached soon.

United States:
The risk of a strike at U.S. East and Gulf Coast ports is escalating, with the International Longshoremen’s Association (ILA) threatening action starting 1st October. Container spot rates from Asia to the U.S. have surged, and carriers are quietly acknowledging that a strike could help maintain these elevated rates through the end of the year. The early peak season, driven by shippers anxious to front-load holiday goods, has already led to concerns about overcapacity. A strike could exacerbate these issues, leaving carriers with little room to manoeuvre.

As negotiations remain tense and the potential for disruptions looms large, businesses and supply chain managers must remain vigilant and proactive in their planning. The impact of unresolved labor disputes could have far-reaching consequences for global trade, especially as we approach the end of the year.

We have contingency plans in place to avoid ports likely to be most affected by strikes, along with alternative routes and entry points.

To discuss the issues raised here and how PSP Worldwide could protect your supply chain, please EMAIL our managing director, Colin Redman.