LA Port Strike Highlights Labor’s Role in Supply Management Risk

Over the past week, the International Longshore and Warehouse Union has held thousands of containers hostage, shutting down shipping at two ports on the US West Coast. While current shipping delays are impacting hundreds of manufacturers importing from China and other Asian ports (primarily), the greater takeaway for supply management professionals is the importance of factoring labor into supply risk equations. While we often think of individual suppliers as primary risk drivers in risk calculations, labor can play a role as well – not to mention hidden suppliers, including ports, which do not even show up in most multi-tier supply chain diagrams and schematics.

When we think of port strikes, this disruption is even more emblematic of hidden supply chain risks that companies face. In the past, when supply chain and procurement organizations considered labor in the context of port risks, we thought of those unloading cargo versus back-office support professionals. But in this case, the strikers are precisely those we might not even have considered in a high-level labor risk assessment. The LA Times does a solid job summarizing the situation:

"About 800 clerical workers based at the Los Angeles and Long Beach ports find themselves in a position to wreak havoc on the economy of Southern California. Members of a local unit of the International Longshore and Warehouse Union, they have gone on strike against the shipping companies that employ them, shutting down most of the cargo terminals at the two ports. The dispute epitomizes the issues confronted by organized labor in a globally connected world: The union is fighting to hold onto jobs that are increasingly threatened by automation and the Internet."

Looking ahead, our supply risk calculations must take labor into account – at our suppliers, sub-tier suppliers, and with our logistics providers and "hidden" suppliers, including ports, not to mention the clerical workers behind the scenes. Perhaps just as we strive for green supply chains to win the support of increasingly global thinking customers, we'll aim for organized-labor free supply chains to appease the concerns of risk managers and CFOs.

- Jason Busch

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