Next Moves for Supply Chain Leaders Following the 2024 U.S. Port Strike

Re-Published With Permission From Construction News and Review

By Brian Whitlock | Senior Director & Analyst, Gartner

In light of the U.S. port workers’ strike in Q4 2024, how can the U.S. supply chain leaders return to boosting their preparedness?

Supply chain leaders need a strategic stand on risk, planning and automation
The recent massive port workers’ strike left many supply chain leaders scrambling – again.

Strikes are only one of the myriad disruptions that supply chain leaders face, so why does each one seem to come as such a surprise?

Here are some ways that supply chain leaders can improve their preparedness as they approach the issue of automation, which remains front and center as a point of contention in this latest strike.

Why are supply chains so often wrong-footed despite the constancy of disruption?
Even chief supply chain officers with a strong risk management mindset may fail to push risk planning down into logistics, where the function often isn’t measured in terms of risk management and planning or staffed adequately for it.

Logistics management, and the supply chain organization as a whole, then becomes vulnerable to the “fighting fires” mentality, where adapting to disruption means adopting tactics such as relying heavily on third-party logistics providers (3PLs).

Reactive risk management can work well in the short term, but it's not sustainable and comes at significant cost (in part because it happens over and over again). For instance, during the pandemic, the reliance on 3PLs led to significant unplanned expenses for organizations as ocean carriers
profited. Corporations took a hit to the bottom line but solved only for the problems at hand.

The latest strike was a reminder that supply chains must shift from reactive approaches to integration of supply chain risk management and planning into logistics.

With the U.S. port workers’ strike on pause, supply chain leaders can return to boosting their preparedness.

Consider the strategic value of automation to your supply chain
While the U.S. East Coast port workers extended their contract to January 15, automation remains a sticking point. Even with this extension, it appears the International Longshoremen's Association (ILA) is still working to shore up guarantees from its United States Maritime Alliance (USMX) employer group to ensure that its work won’t be automated by cranes and driverless trucks, which can shuttle goods from container ships with little or no humans.

Notably, West Coast port workers have previously secured significantly higher wages while allowing automation, so it’s unclear where these negotiations will land. But whatever the ultimate terms, the issue for supply chain leaders remains the strategic fit of ports. For CSCOs, the decision to use a particular port is based more on its role within the supply chain rather than its level of automation.

Factors such as location, connectivity to rail and road networks and overall efficiency will continue to play a more significant role than the question of whether the port is automated – unless and until that level of automation delivers gains in performance and productivity that can drive supply chains more effectively.

Use this time to manage disruption to logistics proactively
While this potential disaster appears to have been dodged – or at least stalled – now is the time to anticipate and manage the impact of future disruptions to your logistics strategy:

• Actively manage a proactive risk management program that allows you to take preemptive actions in cases of a potential disruption.
• Assess your risk tolerance and identify preemptive measures, such as diversifying logistics providers or changing shipping modes, where you can and where it makes business sense.
• With this short-term reprieve, partner with your ocean carriers and other providers to discuss their contingency plans, and how they will support you during a potential period of disruption.
• Develop inventory strategies, such as building up stock at customers’ or local warehouses to help mitigate the impacts of disruption as needed.
• Communicate and manage the message to internal and external stakeholders. Make sure sales and customers know what’s coming, as well as the potential impacts, and how they’re planning to support customers during that time.
• Work with customers to pull forward orders and collaborate on solutions.