While we were all keeping a close watch on labor talks at East Coast ports, it turned out to be the weather and not a strike that proved the greater threat.
Superstorm Sandy cost Northeast supply chains at least $1 billion in the estimate of IHS Global Insight, a major business consultancy. The Port of New York and New Jersey had to shut down operations for several days during the most important shipping season of the year. John F. Kennedy International Airport's cargo operations also closed down for some time.
The long-term damage to supply chains from the storm appears to be relatively minimal. That's in part due to the fact that disruptions to any one region of the country, while certainly significant, are mitigated by the sheer scale of the nation's transportation infrastructure. In the wake of the storm, the National Retail Federation and the consultancy Hackett Associates reported that import volumes at the nation's major container ports were likely to be up 5.9 percent in November over last year. Indeed, ocean carriers were able to divert ships to other ports, including the Port of Virginia.
Oddly, the fact that shippers were able to get much of their holiday merchandise into East Coast ports ahead of the storm may be related to the difficult labor talks between the International Longshoremen's Association (ILA) and port terminal management. At one point, shippers feared the ILA could strike as early as Sept. 30, and many had accelerated shipments to ensure that goods arrived ahead of any labor stoppage.
Domestic freight held up because of the storm (and a second storm that hit beleaguered residents a few days later) resumed moving fairly quickly—sometimes ahead of the ability of businesses hammered by the storm to accept delivery.
The response to the storm highlights both the vulnerability of supply chains to sudden disruption and the U.S. logistics industry's ability to bounce back. In particular, we want to applaud those in the industry who offered assistance in the aftermath of the storm. Jock Menzies, president of the American Logistics Aid Network, which connects the supply chain community with disaster relief groups and emergency management organizations, told Senior Editor Mark Solomon, "We have seen an outpouring of support from the supply chain community. To date, donation offers have included warehouse space, office space, material handling equipment, and engineering expertise." (For more of Solomon's superb coverage of the Sandy's effects on supply chains, click here.)
In the meantime, the port labor negotiations that might have closed the ports continue with guidance from a federal mediator. The two sides have agreed to work under the contract that expired on Sept. 30 until the end of the year.
