What Freight Forwarders Need to Know About Port Strikes

Why are port workers striking?

Port strikes are typically related to labor disputes and related pressure tactics from port workers, truckers, equipment operators, and other key staff. These disputes are often in the context of collective bargaining, or the negotiation of contracts between labor unions and port authorities or management. Disagreements over contract terms, including work rules, scheduling, overtime pay, and seniority, can lead to strikes if workers feel their rights or negotiated agreements are being violated. Some examples of reasons port workers may come together in such:

Wages and Benefits: Disputes over wages, bonuses, and benefits are a common cause of strikes. Dockworkers and port workers may demand higher pay, improved benefits, or better working conditions.

Job Security: Concerns about job security can lead to strikes. Workers may protest against potential layoffs, outsourcing, or automation that could threaten their employment.

Working Conditions: Poor working conditions, such as inadequate safety measures, long working hours, lack of breaks, or insufficient rest periods, can trigger strikes as workers seek improved conditions.

Staffing Levels: Disputes may arise over staffing levels, with workers demanding increased staffing to handle workload demands and maintain safety standards.

Health and Safety: Concerns regarding health and safety conditions, such as inadequate protective gear, exposure to hazardous substances, or accidents resulting from insufficient safety measures, can prompt strikes.

Key Takeaways

• A recent strike affecting about 7,400 workers lasted 13 days and halted shipments in and out of about 30 ports in British Columbia, including Canada’s largest, the Port of Vancouver.
• Port strikes often lead to the suspension or slowdown of port operations, resulting in delays in loading and unloading cargo. Freight forwarders may experience delays in receiving shipments or delivering them to their customers, which can disrupt supply chains and impact inventory management.
• If perishable goods are spoiled due to port-related delays, you may be eligible for financial compensation if you have adequate cargo insurance coverage.
• Freight software solutions that offer real-time tracking capabilities, built-in reporting, and integration with various stakeholders in the supply chain will give you the oversight needed to pivot when needed.

How do port strikes impact freight forwarders and their customers?

A recent strike affecting about 7,400 workers lasted 13 days and halted shipments in and out of about 30 ports in British Columbia, including Canada’s largest, the Port of Vancouver. The ripple effects were widespread: extended shipment delays, heavy port congestion, long delays for rail shipments from Vancouver to destinations across Canada, lack of empty containers at ports across the country, demurrage from steamship lines due to delays, lack of chassis and truck drivers all across the country, and so much more.

This is only one example of how the effects of port strikes in one area can reach far beyond the directly impacted ports. Port strikes can have significant and lasting impacts on freight forwarders and their customers, even on the other side of the continent, causing disruptions and delays throughout the entire supply chain. Here are some ways in which port strikes can affect freight forwarders and their customers:

Delayed Shipments: Delayed shipments are the first effect that comes to mind when thinking about port strikes, but they’re far from the last. Port strikes often lead to the suspension or slowdown of port operations, resulting in delays in loading and unloading cargo. Freight forwarders may experience delays in receiving shipments or delivering them to their customers, which can disrupt supply chains and impact inventory management.

Increased Costs: Extended port strikes can result in additional costs for freight forwarders and their customers. Delays can lead to storage fees, demurrage charges, and increased transportation costs to reroute shipments or find alternative port options.

Capacity Shortages: During a port strike, container terminals may become congested due to halted operations or reduced staff. This can lead to a shortage of available container space, making it challenging for freight forwarders to secure the necessary capacity for their shipments.

Inventory Disruptions: Port strikes can disrupt the flow of goods, leading to inventory shortages or stockouts. This can affect production schedules, distribution plans, and customer satisfaction for both freight forwarders and their customers.

Operational Planning Challenges: Port strikes can make it difficult for freight forwarders to plan and execute their operations effectively. Uncertainty regarding port availability, labor disputes, and unpredictable timelines can complicate scheduling and coordination efforts.

Contractual Obligations: Port strikes may lead to breaches or delays in fulfilling contractual obligations between freight forwarders, shipping lines, and their customers. This can result in potential financial and legal implications.

How to Prepare Your Freight Forwarding Business to Deal with Port Strikes

Overcoming the many challenges related to port strikes requires a proactive approach and effective risk management strategies. Here are a few important strategies that can help freight forwarders and logistics service providers address these challenges:

Use a Freight Software Platform That Delivers Visibility and Control

When exceptions happen and shipments are delayed, you need a clear line of sight to your shipments. Supply chain software is a key enabler of visibility and control over the entire shipping process. Freight software solutions that offer real-time tracking capabilities, built-in reporting, and integration with various stakeholders in the supply chain will give you the oversight needed to pivot when needed.

Implement Rate Management Software to Easily Assess Route Options

In the event of a port strike, it may be necessary to assess alternate routes. That can quickly get expensive! Rate management software like Magaya Rate Management simplifies the task of finding cost-effective alternate routes and ports by putting all up-to-date information at your fingertips, helping you make the best decision for each shipment.

Build a Diverse and Strong Partner Network

Depending on the scope and nature of the strike, it may be impossible to keep cargo moving when everything comes to a halt. But when things open back up, or if you are able to proactively reroute shipments, it’s critically important to have a broad, diverse partner network in multiple regions and across various modes, so that you always have a fall-back plan to keep your customers’ shipments moving.

Safeguard Your Business with Insurance

Insurance plays a key role in mitigating the risks associated with port strikes by providing financial protection against potential losses. For instance, if you are arranging transportation of perishable goods that are spoiled due to delays, you may be eligible for financial compensation if you have adequate cargo insurance coverage. Regularly review and update your insurance coverage to align with the evolving risks in your operations.

Develop a Contingency Plan for Communication with Customers

During port strikes, keeping customers informed is crucial to maintaining their trust. A well-thought-out communication plan helps you manage expectations and provide timely updates. Make sure to leverage your digital customer portal or other communication channels to send regular updates on shipment statuses, rerouting options, and potential delays. Clear communication reassures your customers that their shipments are being managed proactively, even in challenging situations.

Monitor Labor Relations and Port Activity

Staying ahead of potential strikes can give your business the time needed to prepare. Use industry news sources, government reports, and port-specific alerts to monitor labor relations and port activity. Subscribing to newsletters or industry alerts about upcoming labor negotiations or disruptions allows you to act swiftly before a strike becomes imminent. Staying informed helps you reroute shipments or put contingency plans into place before a disruption even begins.