Friday, October 4, 2024

Supply Chain Disruptions

Despite the settlement yesterday of the Longshoremen’s strike of seaports from Vermont to Texas, manufacturing delays and shipping bottlenecks are likely still ahead for all of us.

While the International Longshoremen Association’s two-day labor action at fourteen seaports from Vermont to Texas will still introduce some delays, the devastation to road, rail and infrastructure along the path of Hurricane Helene will make it a tough fourth quarter in an already not-so-great year. Despite their return to work today, the labor concessions they wrung out of the United States Maritime Alliance will doubtless be passed on to their customers.

Eighty five thousand members of the International Longshoremen Association shutdown operations at fourteen ports along the Atlantic and Gulf Coast. It didn’t take long to make their point with shippers. OWDN photo.

The Longshoremen’s lockdown of fourteen ports along the Atlantic and Gulf Coasts temporarily stopped the export of approximately 68% of containerized goods and the import of more than 56% of finished goods and components for the entire country.

Procurement managers we spoke with warned that, a week-long strike by the ILA could mean a five-week delay in offloading and shipment of waiting and transiting containers. A two week strike, they warned, had the potential to delay raw and finished goods deliveries into early 2025.

Hurricane Helene has devastated parts of Florida, Georgia, Tennessee and North and South Carolina. Damage will impact transport and manufacturing for some time to come. North Carolina Department of Transportation photo with permission.

Manufacturers and their suppliers located in the areas devastated by Hurricane Helene are still trying to estimate the impact. But the shipping of scrap steel will certainly be impacted by the transportation infrastructure damages.

That delay may hamper reconstruction efforts as the electrical grid damage, especially in the Carolinas, is “unprecedented.” Repairing the electrical grid means additional need for transformer and motor repairs, driving up the demand for electrical steel. There are also interruptions ahead in the actual production of product by steel mills impacted by Helene. Then there’s the challenge of getting their product delivered through the shattered road and rail infrastructure.

Consumers will be feeling the impact of agricultural production disruptions. Across Georgia, North and South Carolina, agricultural damage has disrupted harvests of fruits and vegetables, and shutt down or destroying poultry and pork producing houses.

Because of the extent of the loss of produce, livestock and roadways, the grocery industry is predicting inventory drops of 15-20% in major grocery chains over the he next 7-10 days

Factor in the tension over petroleum supplies and prices due to the increased tensions between Israel and Iran and it’s shaping up to be a tough end of 2024.