Port Strike Begins, Endangering US Supply Chains

A massive dockworker strike at seaports on the U.S. East and Gulf coasts is expected to wreak havoc on global supply chains and the economy, reports CNBC. Workers at ports stretching from Maine to Texas went on strike early Tuesday in a dispute over wages and automation. The action, which is likely to have severe consequences on ships carrying billions of dollars of cargo, is the first by the International Longshoremen’s Association (ILA) union in nearly half a century. The ILA, which represents about 45,000 port workers, made good on its threat to strike at 14 major ports after talks broke down with the United States Maritime Alliance, or USMX, employer group ahead of a Sept. 30 deadline.

Total Retail's Take: Supply chain leaders across the United States are facing yet another challenge, this time in line with the beginning of the holiday season. Ocean supply chains have already been hit hard this year by conflict in the Red Sea, a lengthy drought affecting the Panama Canal, and the Baltimore bridge collapse. The ILA's strike, which began Tuesday at 14 major ports, impacts 60 percent of all goods entering the U.S., according to CNBC. This is a major disruption to retailers' supply chains, as product might not make it to warehouses and stores. If the strike lasts several weeks or longer, U.S. consumers may start noticing product shortages and increased prices on in-demand goods that are in short supply.

Shipments currently sitting at the striking ports in the U.S East and Gulf coast will be impacted first. There will then be a knock-on effect for vessels currently queuing outside the ports, delaying future shipments to and from the U.S. Danish shipping giant Maersk has warned that just a one-week shutdown could take four weeks to six weeks to recover from, “with significant backlogs and delays compounding with each passing day.”

The strike could have ramifications on the U.S. economy. President Biden has said that he will not use existing labor law to force union workers back on the job, which is within his powers under the Taft-Hartley Act. However, if the strike begins to have an economic impact or is prolonged by negotiations by the ILA, the government may need to intervene.

Paul Pallath, vice president of applied AI at Searce, an AI consultancy that works with some of today’s biggest retailers, offered his thoughts on the potential ramifications on retailers' businesses from the port strike:

"The ongoing port strike significantly impacts the retail sector, creating a ripple effect throughout the supply chain. Delayed shipments lead to stock shortages, impacting in-store availability and online fulfillment. This directly translates to lost sales and potential damage to brand reputation as consumers encounter empty shelves or extended wait times for online orders. The knock-on effect extends to increased costs, as retailers scramble to find alternative shipping methods, often at a premium.

"AI can play a crucial role in mitigating some of these impacts. Firstly, dynamic pricing, powered by AI algorithms, can become essential. Instead of static prices, AI can analyze real-time inventory levels and predict demand based on historical data and current events (like the strike). This allows retailers to optimize pricing based on scarcity. High-demand, low-stock items can be priced higher, while less impacted items can offer controlled discounts to stimulate sales. AI-driven forecasting can also help anticipate future shortages, enabling proactive purchasing and strategic inventory management to lessen the impact of future disruptions.

"Furthermore, AI can optimize logistics and distribution. Retailers are increasingly turning to their physical stores as micro-fulfillment centers, fulfilling online orders directly from store shelves. AI can streamline this process by optimizing picking routes within stores, managing inventory levels at a granular level and predicting demand at individual store locations based on local demographics and sales trends. This requires integrating AI into existing point-of-sale (POS) systems and warehouse management systems (WMS) for seamless data flow and decision-making.

"However, the success of AI in mitigating the strike's effects hinges on the quality of data input. Accurate and timely data on shipping delays, inventory levels, and consumer demand are crucial. Retailers must invest in robust data collection and integration systems to ensure AI algorithms function effectively. The challenge lies in adapting quickly to a rapidly evolving situation, leveraging AI’s potential to respond dynamically and minimize the negative consequences of the ongoing port strike."