Labour disputes loom over supply chains

Labour disputes continue to cast a shadow over global supply chains, with potential strikes in Germany and the US threatening to disrupt key ports.

While recent resolutions in Canada and India have provided temporary relief, the global shipping landscape remains precarious, with Red Sea diversions amplifying the potential impact of industrial action.

Recent Resolutions

Canada
The Canadian government swiftly intervened to end a rail strike that began on 23rd August, ordering Canadian Pacific Kansas City (CPKC) and Canadian National (CN) to resume operations and enter binding arbitration with the Teamsters Union. Although this temporarily safeguards the supply chain, the union has filed multiple appeals, indicating that further strike risks may still exist.

India
A nationwide strike involving 12 major ports was narrowly avoided in late August after the Indian government agreed to wage increases and additional benefits for 20,000 port workers. Union leaders credited the strike threat with securing the deal, which averted significant disruption during the peak export season.

Ongoing Threats

Germany
The risk of strikes at major German ports remains high, with the trade union ver.di rejecting the latest offer from the Central Association of German Seaport Operators (ZDS). With the contract expired and warning strikes already occurring at key ports like Hamburg and Bremerhaven, negotiations remain tense. Without a resolution, further disruptions could significantly affect supply chains.

United States
Strikes at US East and Gulf Coast ports are becoming increasingly likely, with the International Longshoremen’s Association (ILA) threatening action starting from 1st October. The US Maritime Alliance (USMX) has been unable to secure a meeting with the ILA to negotiate a new agreement, raising concerns about a prolonged strike. Even a one-day strike could cause a six-day backlog, and if it lasts a week, the impact may stretch well into November. A two-week strike could disrupt global trade well into 2025.

Wider implications
As shippers rushed to front-load holiday goods, concerns about overcapacity have surfaced and labour disruption could further exacerbate these issues, leaving carriers with limited options to manage the fallout. The ongoing risk of strikes, coupled with existing pressures on capacity, port congestion, and rising freight rates, underscores the need for shippers to remain proactive in their planning.

Contingency measures
To mitigate the impact of potential strikes and safeguard supply chains, we have contingency plans in place. These include alternative ports, routes, and entry points to ensure that cargo continues to move smoothly, even in the event of labour disruptions. Shippers must remain flexible and prepared to adjust their logistics strategies as negotiations continue and uncertainties loom.

If you would like to discuss how we can protect and optimise your supply chain during this uncertain period, please EMAIL Matt Fullard.