With the recent ILA-USMX labor negotiations behind us, the focus now shifts to their impact on supply chains and port operations. Brian Lynch, Transportation Sector Leader at EY Americas, discusses the effectiveness of pre-strike mitigation efforts, the long-term competitiveness of U.S. ports, and the role of automation in the industry.
Supply Chain 24/7: Looking back, how effective were the pre-strike mitigation efforts in minimizing disruptions to supply chains?
Brian Lynch: Leading companies put mitigation actions in place well in advance of the pending ILA strike date. Supply chain variability stemming from the global pandemic forced companies to become more agile and, in some cases, more risk-averse.
Companies have been able to dust off playbooks from the pandemic, from the 2023 ILWU (West Coast) labor actions and the October 2024 ILA labor action to minimize disruption.
SC247: Do you think the resolution can allow people to go back to business as usual, or do you see another labor strike in the future?
BL: The January 2025 ILA – USMX agreement signaled a return to business as usual. While ratification of a six-year agreement by the ILA is still pending, the indication is that the parties will move forth in good faith.
SC247: What lessons can be drawn from the negotiation process?
BL: There are lessons learned from the negotiation process on several fronts. For shippers, it is a reminder to stay agile, run scenario simulations, and have contingency plans in place.
Similarly, carriers and logistics service providers must remain nimble and over-communicate to customers (e.g., shippers) to ensure clarity of evolving schedules, the introduction of surcharges, etc.
Additionally, once the topic of wages was resolved, technology and automation became the most contentious issue. While certain technologies available may be in the best interest of port employees – especially in the longer term – there was resistance against it.
SC247: What are the long-term implications of this strike on U.S. port competitiveness in the global market?
BL: In the near term, operations should follow the status quo. In the long term, the productivity gap between the US and other global ports may widen as technology and automation remain key competitive differentiators in port efficiency.
SC247: Are there specific regions or ports that may see a more significant impact compared to others?
BL: Globally, the most automated ports are located in Europe and Asia. From a port perspective, these regions have also been more adaptive to technology and automation solutions.
Within North America, geopolitical factors will also influence port usage. Shifting population centers, near-shoring, tariff solutions, infrastructure, port capacities and hours of service, and inland transport costs are just some of the variables.
As leading companies continue to evaluate total landed cost in their decision-making, trade flows may shift to alternate ports.
SC247: How might this agreement influence the adoption of automation in U.S. ports?
BL: Automation is not off the table. The pending agreement specified that technology and automation adoption would have to support the creation of human jobs. Given the wage increase agreement in this latest contract negotiation, we could see the increased cost of labor and job creation hinder the implementation of new technologies and automation.
SC247: What are the potential benefits and challenges of increased automation for dockworkers and shipping companies?
BL: Proponents of automation contend that increased efficiency will result in more business for the respective ports, thus growing the overall workforce and pay scale. There is also the contention that automation provides a safer environment for dock workers through reduced error and injury.
AI and automation could be a game-changer for port workers by improving and maximizing efficiency in areas such as scheduling, predicting vessel arrivals, and managing resources. With predictive analytics and machine learning, potential bottlenecks can be anticipated in advance so workers can plan ahead, cut down on downtime, and boost overall productivity – leading to a smoother, more efficient workflow.
At the same time, introducing automation into port operations is not a simple feat. And in addition to labor, there are several considerations that must also be considered, including high capital outlay and one-time costs, implementation time/time to value, technology integration, and change management, to name a few.
A balance must be struck. Introducing automation in a way that doesn’t negatively impact the worker, maybe framed by up-skilling or re-skilling the workforce, can create good jobs even while introducing technology and/or automation.
SC247: Do you anticipate any new infrastructure investments as a result of this strike?
BL: While infrastructure investment is certainly required for select port operations, new infrastructure investments resulting from the labor event are not anticipated.
SC247: Which areas of port infrastructure would benefit most from additional funding and development?
BL: According to the American Society of Civil Engineers (ASCE) most recent infrastructure report card, ports received a B- (which is comparatively one of the more favorable infrastructure grades). Key opportunities still exist, particularly with waterside infrastructure, including everything from piers, docks, and bulkheads to harbor dredging.