Labor stoppage, which is also known as a strike, is the problem aroused by the tension between a labor force and management. Tension usually starts with the conflicting view points of each party, labor wanting the maximum for the service that they provide while management is willing to pay the minimum for the same service. In general strikes are quite rare whereas 98% of the union contracts in USA are settled without a strike every year, however when a strike does occur the affects are quite damaging.
The origins of dock strikes in the US (especially West Coast) go back to Longshoremen (also known as dockworkers) unions. They were originally unorganized labor that were selected by a hiring party and with the affects of the Communist party in the 1920’s and other unions they became more demanding, and started the first strike on 1934, which is called the West Coast Longshoremen’s strike that lasted 83 days.
It started in San Pedro, LA then affected port operations in Oakland, Portland & Seattle as well. Two people were killed in the demonstrations (Bloody Thursday) and all other unions in San Francisco decided to go on strike for four days due to unfortunate events. Arguably, the biggest dock strike that hit the economy bad was in 2002, also called the West Coast Dock Strike of 2002. When longshoremen decided to go on strike the estimated effect to US economy was $1 Billion per day!
With the new advances in technology and common use of new supply chain practices (such as Just In Time), any interruptions in the supply chain has more damaging affects than ever before. Many companies are now utilizing systems where when a product is sold at end point it triggers the factory in Asia to produce the new product thus ending reliance on holding cost of inventory. Containers are now moving from ships to distribution centers where it’s immediately broken down, repacked and sent to its final destination, and this new revolution in low inventory and successful utilization of supply chain logistics became the formula of productivity in USA. However this also came with a huge risk, risk of relying on external factors, like a labor strike that can damage the “perfect” system. Another problem that increases the huge risk of a strike is the disproportionate growth of West Coast trade. In the 1980’s, California accounted for only 15% of waterborne trade and in the 2000’s West Coast ports handled 42% of US waterborne trade, which more than doubled for the last 20 years or so. The biggest underlying threat that triggers the strikes especially in West coast ports is the advances in technology.
Management at ports would like to bring barcode scanners, fast passes for toll booths and cargo tracking in the terminals so that they can make the system more efficient and cost saving however this does not goes well for Unions who employ 10,500 members that make from $80,000 to $158,000 per member.
Currently, there is a possibility of a threat of strike in East coast ports as well, and this threat is also used by steamship lines now to increase the rates as expectations of a possible lockout, so it seems a port strike now can not only disrupt the supply chain operation of importers but also affect the freight rates thus increasing the costs further.
SINGAPORE, April 24 (Reuters) – Demand for liquefied natural gas (LNG) to power ships will rise this year on attractive prices, while more dual-fuel vessels join the global fleet, industry executives said....
The Georgia Ports Authority and Wallenius Wilhelmsen have signed a 20-year terminal lease agreement consolidating the company’s handling of automobiles and roll-on/roll-off cargo at the Port of Brunswick. The lease, which includes options for...
By Gavin van Marle (The Loadstar) – The main US ports enjoyed another stellar month in March, according to new figures from noted analyst John McCown His figures show imports at...
April 22, 2024
Total Views: 941
Why Join the gCaptain Club?
Access exclusive insights, engage in vibrant discussions, and gain perspectives from our CEO.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.