Déjà Vu All Over Again: Possible Supply Chain Disruptions Ahead
The following article first appeared on Carmody Torrance Sandak Hennessey website. It is reposted here with permission.
A dispute between the International Longshore and Warehouse Union, representing over 40,000 workers in Pacific ports and the Pacific Maritime Association over demands for increased wages is already causing delays in shipping operations at some of the busiest ports in the country along the West Coast, and could soon have manufacturers experiencing yet another supply chain disruption.
Delay times are trending upwards in key West Coast ports, including Los Angeles, Seattle, and Long Beach, California with week-over-week shipping costs already jumping by as much as 20% due to the increasing congestion.
While the White House and lawmakers continue to monitor the situation, negotiations are ongoing behind closed doors between the ILWU and the PMA.
Manufacturers and businesses in general would do well to heed the lessons of pandemic and post-pandemic supply chain nightmares, including the fact that even seemingly small disruptions at key points can, and often do, have ripple effects across the entire global supply chain, potentially resulting in increased manufacturing costs and delays.
Manufacturers should prepare now to help minimize negative impacts on your business from what could be a looming shipping crisis:
- Assess and check in with your suppliers to determine if they have plans in place to weather anticipated supply chain issues;
- Locate and/or line up alternative suppliers;
- Evaluate the suitability of potential product and component part substitutions;
- Review current contracts that may be impacted for force majeure and other relevant provisions; and
- Begin working with customers if delays are foreseen to head off potential issues.
Getting ahead of these issues proactively will help avoid the worst outcomes of any transportation shortage or slowdown.
About the authors: Jason Gagnon is a partner with Carmody Torrance Sandak Hennessy focusing on commercial litigation with a particular emphasis on products liability, utility law, and employment law. Jeff Beck is an associate with the firm.
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