US port strike has CIOs prepping for supply chain implications

Dockworkers have launched a widespread strike at ports across the eastern US from Texas to Maine, with wages and automation topping their list of labor concerns. The stoppage, the first in decades, could cause price hikes and supply shortages, depending on how long it lasts, the AP reports.

At midnight on Monday, roughly 45,000 workers, including longshoremen and women, walked off the job at ports up and down the Eastern seaboard, halting an enormous amount of shipping in the US.

Ayesha Tariq, co-founder of consulting firm MacroVisor, said on LinkedIn that the “biggest disruption as a result of the US port strike is likely to be in machinery, autos, and fresh food” and estimated that 38% of imports are processed through the East and Gulf Coasts.

In an era of major technology shifts and business disruptions, CIOs are better prepared to help their companies navigate possible delays due to the port strike but settling the impasse is of great concern, observers claim, as a protracted strike could have widespread impact on organizations across a range of industries.

As for the near-term impact, major consumer retailers such as Walmart and Home Depot, for example, have become increasingly agile and proactive after major supply disruptions such as COVID and the Baltimore Bridge collapse, and enjoyed advanced knowledge of this potential strike, which will likely help stabilize the supply chain for a period of time, Tariq said.

“The US is entering peak demand season for goods — Black Friday and Christmas — but many of the retailers have learned their lesson and stocked up early,” Tariq claimed.

And while analysts expect a somewhat swift resolution to the work stoppage, “CIOs need to stay tuned into what’s happening around the globe and be thoughtful how it might affect their ability to operate,” said Bob McCowan, CIO at Regeneron Pharmaceuticals.

“The past few years has required us to navigate pandemics, fire, flood, and wars that have affected supply chain challenges, and now we have a potential port strike to consider,” he said. “Most have built a level of agility to accommodate or mitigate these risks and will be checking in with their suppliers and taking steps to reserve critical resources.”

Gartner supply chain analyst Brian Whitlock agreed. “The one thing CIOs can do is ensure they have technology that provides end-to-end visibility of their supply chain so the business can effectively manage their inventory,” Whitlock says. “This is critical in any disruption. Unfortunately, that’s a preemptive measure that must already be in place.”

Eyeing for fallout, leaning on analytics

Supply chain concerns throughout the COVID pandemic sent many CIOs to reinvent their supply chain management strategies. Central to many of these efforts was an emphasis on supply chain analytics, which enabled companies to leverage data for smoother logistics in times of supply scarcity.  

UPS, for example, turned to predictive analytics, machine learning, and multi-model forecasting as part of its Harmonized Enterprise Analytics Tool (HEAT) for tracking real-time package status and logistics planning. PepsiCo enlisted analytics and machine learning early in the pandemic to predict out-of-stocks and alert retailers to reorder, as consumers stocked up on its products in greater numbers. Pfizer put analytics to work to establish a shared view of end-to-end manufacturing and supply operational performance for its pharmaceuticals.

Now, the port workers’ strike is placing new emphasis on supply chain pressures and ways CIOs can help to relieve them.

Nate Melby, CIO of Dairyland Power Cooperative in Lacrosse, Wisc., said the biggest impact for a company like his — and many others — is in the supply chain.

“Sourcing supplies, parts, and all those components that we need can become unpredictable. Our investments in technology help us to have better predictions of our future needs, and we can trace them through the supply chain to try to anticipate problems and find other sources,” he said. “If we can have the time and forethought to predict, react, and respond as a business, we are more resilient and agile.”

Tom Barnett, chief digital and information officer at Baptist Memorial Health Care in Memphis, has also been monitoring supply while preparing for potential fallout from the strike.

“While it’s unclear as to how long this could potentially last and to what extent it could impact us, we need to plan for it to be brief or protracted and severe,” Barnett said. “We began building a cushion several weeks back and will continue that for a little while longer to mitigate these potential delays on our hospital operations. We know our normal consumption rate, we know our planned new construction rate, and then we build in a reserve on top of that.”

That kind of insight into supply-chain dependencies can help organizations better navigate what might be ahead.

Tech refreshes on notice

Tracy Woo, a principal analyst at Forrester Research, pointed out the acute impact the port strike could have on the technology supply.

“Supply chain will be affected for servers, chips, and any hardware deliverables. This can affect data center refreshes both for an on-prem environment and for even the public cloud providers themselves,” Woo claimed.

CIOs who have refreshes or new infrastructure projects in the pipeline for their fleets and data centers could be impacted, especially hardware being delivered from APAC, Woo said. 

“For CIOs that are reliant on new services, this may create vulnerabilities or at least impact company roadmaps for delivering products and services,” she added.

Automation at issue

In addition to large wage increases, dockworker demands include job security as a key concern in an industry that is undergoing massive transformation by automation, AI, and robotics.

Automation is inevitable in the global shipping industry and the union leaders should be taking a pragmatic approach, acknowledge that jobs are going away, negotiate better severance packages, retrain, and “top up” pension terms for their members, said Steven Dickens, Chief Technology Advisor at The Futurum Group.

“The case for autonomous robots, AI, and automation keeps getting stronger. As port workers strike, they are only going to accelerate the adoption of technology by port operators,” Dickens claims. “It’s a lose/lose.”

Dickens predicts the unions will settle and accelerate the industry’s digital transformation.

“What the [port] operators will do is sign a 5-year contract, exclude any provisions related to the implementation of autonomous robots, AI, and automation,” he predicted. “They will include open, vague language that allows the union to claim a ‘win,’ but in reality [port operators] will have the ability to automate.”