In North America a survey on how a West Coast ports strike could impact logistics has been released.
With a strike looming as the holiday season gets nearer, the survey found that only 52% of the companies who responded are prepared.
The logistics professionals surveyed came from a variety of different sectors including 36% in manufacturing and 18% in retail, as well as 23% working for other 3PL logistics providers across the USA.
The anticipated strike has seen a variety of contingency plans being put in place. The most popular of those is to use alternative ports.
The biggest winners of the alternative ports are the New England ports New York / New Jersey and Boston with 39% of businesses choosing to route trade through these.
The up and coming port of Savannah, Georgia is the next most popular option with 26%, and the Canadian Port of Vancouver is seen as the third best option for a further 23% of companies.
While all of these ports are likely to see a short-lived boom if the strikes take place what will be interesting is how much trade will not return after a strike ends and still be routed through these destinations.
Will businesses want to mitigate future risk and leave a proportion of their imports coming through alternatives? The companies surveyed are big importers of goods into the USA. 59% of the respondents said that their companies imported more than 90% of their total inventory and 65% had at least 75% of their total imports currently routed through the West Coast posts.
With this heavy reliance on imported goods the importance of both a low risk and flexible logistics set up is vital and these businesses cannot simply look at headline shipping costs. Should the strike go ahead it will, without doubt, be costly for US businesses and their 3PL partners.
Although about 20% of those surveyed didn’t know, or didn’t want to disclose their potential losses in the case of a strike, the information from the remainder was quite stark.
A week-long strike will not be too painful for most with 70% (of those that expressed a value) having losses of less than $250k, although 5% of the businesses will lose over $1 million with only a week long strike.
The picture if the strike extends for a month is much more serious with losses over $500k and above being suffered by 50% of those who provided an estimate figure.
Therefore the seriousness of the potential West Coast port strike should not be under estimated, especially if it extends for any significant period of time. With individual companies suffering large losses through mitigation actions from air-freight to holding increased inventory.
The logistics industry will have it own headaches with the re-routing of vast amounts of shipping to East Coast ports and Savannah in Georgia, as well as through Vancouver, Canada. Container drayage will be put under strain as normal logistics patterns will be changed enormously to cope. If the strike does go ahead and businesses suffer the scale of losses that are possible, will the West Coast ports ultimately then lose out in the long-run as companies choose to mitigate risk by shipping more freight via alternative ports as standard?