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Strike at Britain’s Biggest Container Port Poses New Supply Chain Blow

Contract talks on Monday failed to reach a resolution on wages for nearly 2,000 dockworkers at the Port of Felixstowe as shippers and carriers brace for an eight-day strike later this month.

Companies now face yet another wrinkle in global supply chains with the strike, the first at Felixstowe since 1989, scheduled for Aug. 21-29 at Britain’s largest container port.

“We are disappointed and regret that, despite our best efforts, we have still been unable to reach an agreement with the hourly branch of Unite [union],” the port said in a statement Tuesday.

The port sweetened its offer on wages to include a 500-pound ($604.35) lump sum increase, in addition to an existing offer of a 7 percent hike in pay.

“We urge them to consult their members on the latest offer as soon as possible,” the port said. “There will be no winners from a strike, which will only result in their members losing money they would otherwise have earned.”

The union has repeatedly cited an 11.8 percent real inflation rate in calling out the port’s offer and has been critical of the 1.4 percent increase given to workers last year.

As talks continue, shippers and carriers are preparing for another potential disruption to the global movement of goods.

Felixstowe handles about 4 million twenty-foot equivalent units (TEUs) annually, according to the port, which is owned by CK Hutchison Holdings Ltd.’s Hutchison Ports subsidiary.

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“In cases of previous congestion or capacity issues at Felixstowe, shippers have historically relied on cargo diversions to the Port of Tilbury or London Gateway,” said Jena Santoro, Americas supply chain risk intelligence manager at supply chain tech firm Everstream Analytics.

Santoro pointed to container yard capacity constraints at the port last year that forced Maersk, CMA-CGM and Evergreen to send empty containers to Tilbury. A truck driver shortage only further exacerbated the issue later on in the year, causing the port to halt the return of empties during the busy holiday season. Diversions at Felixstowe also occurred in 2018 when IT disruptions caused delays, forcing shippers to use alternative ports, Santoro added.

ITS Logistics, a Reno, Nev.-based transportation services company, is already alerting shippers to what the implications of Felixstowe could have on U.S. ports, particularly on the already congested East and Gulf coast.

Shippers have for some time now been diverting cargo away from the West Coast ports in favor of the East and Gulf coast ports, causing a shift in congestion. An influx of container cargo from Europe once the strike ends would present another supply chain headwind, ITS vice president of drayage Paul Brashier said.

“Think about it as a rubber band,” Brashier said. “You’ve taken the tension to the max and then you just put a slight disruption on there, be that AB5 [protests] in California last month, be that the strikes that we’re seeing in other European ports as well. Something even as insignificant—what would be perceived as insignificant—as the saber-rattling going on between China and Taiwan and the military tension going on in the Strait of Taiwan, that limits the amount of cargo that can leave China. Any time you’re adding any kind of stress to an already stressed-out situation, you’re going to have to be able to pivot. And it’s something that’s been going on for a while now.”

Stateside, ports in Houston, Mobile, Savannah and New York/New Jersey have already been inundated with cargo.

The Port Authority of New York and New Jersey last week said it’s preparing to implement a container fee program set to begin Sept. 1 in response to the empty container pile-up. The situation there warranted a visit from Federal Maritime Commission (FMC) chair Daniel Maffei last week as the FMC broadens its investigation into carrier charges and ocean liners’ role in terminal congestion.

Companies such as ITS are now asking the question of how they can help their customers manage through the potential glut of containers that are already stacked up in Europe and will continue to be stacked up should the strike go forward.

“Europe has got a lot of freight sitting on the docks in a general sense because of labor disruptions,” Brashier said. “When that stuff starts shipping, how’s that stuff going to affect the East Coast?