Global Supply Chain – Labor
Q4 2024 Market Update
SUMMARY: Strike disruptions in the US and Canada threaten supply chain stability, pose higher costs
Labor unrest affected operations on the rails, in the air, and at sea across North America as Summer turned to Fall.
Significant disruption occurred on both sides of the US – Canadian border in late August as shippers awaited a potential Canadian rail strike. Inventory and logistics planners worked overtime to build inventory reserves and truck transport alternatives that would sustain product flow if a strike occurred. Eventually, the strike was short lived and train movements were halted for less than a single day, but embargoed shipments a week prior to the event interrupted supply chains leading to production shifts being cut and intermodal container flows into and out of ports were interrupted. Freight Waves, Maersk.com Air Canada and the union representing more than 5,200 pilots announced on September 14 a tentative agreement on a four- year contract, averting a threatened strike that could have started within days. Industry trade associations had warned that a work stoppage at Air Canada, which carries cargo in the belly hold of passenger planes and on six Boeing 767-300 freighters, would harm agricultural, manufacturing and medical supply chains that rely on air transport to move time-sensitive goods. Freight Waves, CBC Most concerning of all is the strike by 45,000 International Longshoreman’s Association (ILA), anticipated after contract negotiations between the ILA and the United States Maritime Alliance broke down in June. At issue are wages – the union is demanding a 77% pay increase – as well as a complex thicket of issues including overtime payments, container royalties and automation of port operations. The ILA strike began October 1 and a short-term extension (through mid-January) of the previous contract was agreed to two days later, just as this publication was being finalized. This strike was the first action of its type from the ILA in nearly 50 years, shutting down operations at ports on the US East and Gulf Coasts, impacting 43 percent of all U.S. imports and billions of dollars in trade each month. The extension may calm a roiled global supply chain immediately prior to the holidays, but significant negotiations over safety and port automation – the ILA wants a total ban on automation – remain to be had. In solidarity, the International Longshore and Warehouse Union (ILWU) has publicly stated their support for the International Longshoremen's Association (ILA) in their strike action in 2024, pledging solidarity with the ILA in their contract negotiations. The Biden administration has stated they will not invoke federal law to prevent a strike. Freight Waves, ILA Union, Hellenic Shipping News, Reuters
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