More needs to be done to ensure the long-term stability and sustainability of the US apparel, textile and retail sectors in the face of external headwinds like port strike action.

US fashion retailers and brands breathed a sigh of relief over the weekend as a planned strike at the East Coast and Gulf Coast ports were averted following a tentative deal between dock workers and port operators.

But once again, the panic in the lead-up to the event raised questions around supply chain vulnerabilities and how prepared the apparel, footwear and retail sectors are for events such as these which are becoming commonplace.

Thankfully strike action that shut down shipping operations were limited to three days after a tentative agreement for a wage hike of around 62% over six years was reached, according to a report from Reuters citing sources familiar with the matter.

That would raise average wages to about $63 an hour from $39 an hour over the contract’s life.

The announcement came shortly after retail and apparel trade bodies jointly urged the US Administration to use its powers to end the strike, adding the matter had become one of economic and national security, costing the economy billions of dollars a day and impacting large and small businesses that were not party to the negotiations. 

Relief – for now

The US Fashion Industry Association’s (USFIA) president, Julia Hughes told Just Style everyone is “relieved” the strike is suspended while the two sides attempt to finalise an agreement.

“We have some logistical issues to resolve to get back to normal operations but this is great news,” she added.

Meanwhile, a spokesperson for the National Council of Textile Organisations (NCTO) told Just Style it was pleased the issue was resolved for at least the remainder of the year, as the sector moves into its busy period though they noted negotiations will continue into early January.

However, NCTO pointed out the strikes threatened not only the US industry’s competitiveness but also that of its Western Hemisphere textile and apparel co-production chain, which supports 2m workers and $40bn in annual two-way trade.

“Our industry is facing severe economic headwinds; we have lost 21 plants in the past 18 months. The port strike and Hurricane Helene’s impact on some of our textile manufacturers exacerbated the problems for the industry last week.

“That is the reason we wrote to President Biden, urging his administration to step in and help the parties reach a reasonable, fair and expeditious conclusion, given their role as an intermediary.”

The port strike came hot on the heels of a strike that involved two of Canada’s largest railways which was then halted by the government.

At the time, the AAFA was particularly concerned of its impact during the critical back-to-school period and just at the start of the holiday inventory rush, and since numerous supply chain disruptions by sea meant companies were already diverting cargo and facing distressed trucking routes. 

Impact of the strikes

According to Beacon, a supply chain visibility and collaboration platform that uses AI visibility technology, the strike would have led to cargo volumes piling up, delays in container movements, extended vessel anchor times and bottlenecks throughout the supply chain.

“As fewer containers move through the affected ports, vessel schedules will become increasingly unpredictable and lead to vessel bunching and increasing port congestion levels elsewhere in North America.”

Beacon said the timing of the strike would also hurt businesses – particularly retailers – as they gear up for the important Q4 holiday shopping season.

“This period, which spans Black Friday, Cyber Monday, and the December holiday rush, is the busiest time of the year for retail, and disruptions to the flow of goods can have a major impact on inventory levels and financial performance.

“Retailers rely heavily on well-timed shipments during Q4 to stock shelves with in-demand products. A major strike during this period is likely to contribute to stock shortages, delivery delays, increased logistical costs and missed sales.”

Mitigating supply chain impact from strikes

The NCTO believes an increase in nearshoring and onshoring of production to the US and the Western Hemisphere would help alleviate the impacts of a port strike that would disrupt global trade and long lead times out of Asia.

“Through our free trade agreements — CAFTA-DR and USMCA — our industry has developed strong ties with Central America, the Dominican Republic, Mexico and Canada as well as other partners in the region.

“The industry has weathered many storms, and we are pleased that this port strike has ended this year, as we continue to rebound from the impact of the hurricane and other economic headwinds.”

Fraser Robinson, CEO and co-founder at Beacon, said it is “normal” to see disruption events such as this give retailers a scare.

“Perhaps it’s good to be reminded of the risks that exist in their supply chains as it leads to a heightened focus on proactive crisis management. When things go wrong, many businesses aren’t able to quickly understand their exposure” he adds.

Robinson says it’s important that companies prepare for such eventualities and the key to this is a risk management plan.

“A good risk management plan that is informed by historical visibility data will help retailers scenario plan and develop playbooks for future disruptions. Real-time visibility is also the best crisis management tool when things do, inevitably, go awry. Visibility solutions also help to amass the historical data that lets you uncover the drivers of supply chain reliability.”