It’s time to avert the next supply chain disruption

For the past several months, supply chain stakeholders have been dealing with the potential for a catastrophic labor strike that would have shut down the entire U.S. freight rail system. Many believed a strike was averted back in September when the Biden administration brokered a tentative agreement between the railroads and unions. Unfortunately, the deal was rejected by four of the 12 unions.

The concern was not just rejection of the contract, but differing end dates to cooling-off periods among the unions, after which they would have been free to strike. While there was finally agreement to extend all the cooling-off periods to Dec. 9, it took a herculean effort to make that happen.

At the end of the day, the administration determined there was no potential for agreement on the key sticking point – paid sick leave sought by the unions – so President Biden called on Congress to pass emergency legislation to enact the tentative agreement. NRF supported the call for Congress to act and launched a grassroots campaign encouraging retailers to contact Congress.

There were many questions about whether Congress would act and if lawmakers would do so in advance of a potential strike. Thankfully, Congress did act quickly – although not without drama over an unsuccessful attempt to add seven paid sick days – and the measure was signed by Biden just days before the strike deadline.

A number of rail service issues still need to be addressed, but a strike has been avoided.

While we averted one strike that would have shut down the supply chain, we still face ongoing labor negotiations covering West Coast ports, which began in mid-May and continued after the contract expired on July 1.

Longshoremen have worked throughout the negotiations, and it is now time for the International Longshore and Warehouse Union and the Pacific Maritime Association to renew efforts to get a deal done and provide stability to the supply chain.

NRF wrote to both parties in February, urging them to begin negotiations early in order to reach a contract agreement that would ensure continued cargo growth for the region. NRF warned that a delay in negotiations would negatively impact retailers and other shippers that rely on West Coast ports and could force them to reevaluate their use of those ports.

Much has been written recently about there being no congestion on the West Coast. While that is worth celebrating, it is important to recognize that a major reason those volumes are down is because of ongoing uncertainty over the negotiations. There are other issues as well, but the potential for additional disruption is certainly a major driver. Shippers implemented mitigation strategies leading up to the expiration of the contract, including bringing in merchandise earlier in the year than normal and shifting cargo to the East Coast and Gulf Coast ports, which have seen record growth as a result.

With more than enough other challenges and unknowns facing the supply chain, it’s time to ensure we don’t create disruptions that would negatively impact the economy and the thousands of businesses and millions of workers who rely on fluid operations at the West Coast ports.

It’s time for both parties to redouble their efforts to address outstanding issues and come to an agreement on a long-term contract that provides stability to the supply chain.