Supply Chain Gremlins

As if planning and managing a seamless supply chain weren’t tough enough, a group of gremlins put their heads together last year to find more fiendish ways to bedevil logisticians. First they put Harold Daggett on stage at last year’s TPM Conference in Long Beach to threaten to shutter East and Gulf Coast ports if the International Longshoremen’s Association didn’t get its way with employers in negotiations to replace the master contract.

Then, just to make sure logisticians’ misery wouldn’t end when the contract expired in September, they got the ILA and the United States Maritime Alliance to extend the talks until Dec. 29 and then again to Feb. 6.

The on-again-off-again contract talks have thrown logistics managers’ plans into chaos and added millions of dollars to their costs as they diverted some cargo to West Coast or Canadian ports to ensure their supply chains would continue.

The continuing strike threat also has caused some East Coast port volumes to bounce up and down like a yo-yo. Savannah originally figured its container throughput would increase 3 to 4 percent last year, but then importers using the big retail gateway started diverting about 6,000 to 8,000 containers a month to the West Coast to beat the Sept. 30 deadline. With the multiple contract extensions, that’s still occurring. As a result, Savannah’s 2012 container throughput will reflect about a 1 percent increase.

The Port of New York and New Jersey’s volumes spiked in July through September as retailers scrambled to get their products into warehouses and onto store shelves before the first strike deadline. Those months tallied a much higher percentage of the port’s annual volume than they would have normally. Similarly, the Port of Virginia’s December throughput jumped 20.4 percent year-over-year as shippers scrambled to beat the Dec. 29 strike deadline.

On top of that, the gremlins talked the weather gods into cooking up a monster storm, Hurricane Sandy, which closed New York harbor for six days starting on Oct. 29 and diverted inbound container ships to ports to the south. Although final 2013 figures aren’t in, the diversion caused by Sandy and the ILA strike threat cut container throughput through November to a relatively flat 0.3 percent year-over-year growth.

All of this diversion meant shippers got hammered with a lot of extra costs in 2012 and early this year. Carriers started imposing congestion surcharges as soon as the series of ILA contract deadlines approached.

And importers who diverted inbound cargo to West Coast ports to avoid a possible port strike or to Norfolk during Sandy had to pay almost as much as the ocean leg to bring their containers back east by truck or rail. Storms can’t be avoided, but surely there must be a better way of negotiating labor peace. 

Contact Peter T. Leach at pleach@joc.com and follow him at twitter.com/ptleach_joc.

 

 

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