Global Port Strikes Threaten Supply Chains

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)-- Dryad Global, a maritime risk agency, is sounding the alarm bells over the potential for port strikes across the globe, with North American action set to stress the resilience of the supply chain.

Fertilizer Canada, which represents the business interests of the nation's fertilizer industry, said last week that it was already feeling the impacts of potential labor action from Canadian National Railway Co. (CN) and Canadian Pacific Kansas City (CPKC).

"Railways begin slowing down service ahead of a work stoppage, including issuing embargoes that halt the movement of certain products," the group said August 12.

A week later and provincial leaders were calling for federal intervention to thwart a strike. Alberta's trade minister said recently that strikes would undermine Canada's reputation as a trading partner.

Dryad Global on Tuesday said that, beyond the Canadian rail action, it was fretting over port strikes set for India, the United Kingdom, the United States, South Africa and Australia.

"Port strikes in India, the U.K., Canada, the U.S., South Africa and Australia may cause increased shipping costs, supply chain disruptions, economic consequences, a global trade imbalance, market sentiment and stock market reactions," Dryad said in a Tuesday advisory. "These disruptions have the potential to result in delivery delays, inventory management issues, and price increases."

Most major indices in both the U.S. and European markets were treading water in early Tuesday trading. The price for Brent crude oil, the global benchmark for the price of oil, was trading at around $77.60 per barrel in pre-market action, more or less unchanged from the prior day.

Broader markets may be waiting for news from the Jackson Hole economic symposium in the United States to gauge the next steps in a global economy that's just starting to shake off the woes of runaway inflation.

The more immediate concern is on labor action in Canada, where rail workers could strike by Thursday. Dryad said that in India, dockworkers at 12 major ports could strike by August 28, including at two ports that handle more than half of all of India's water-borne trade.

Next month, the International Longshoreman's Association is warning of labor action at major U.S. ports such as Boston and Houston as the labor group presses for better wages. Dryad said the potential work stoppages in both Canada and the United States could create supply-chain problems for at least a couple months.

Any large-scale disruption to global trade channels could bring new concerns to the market. Maritime shippers are already working to avoid the risks of attacks from the Houthi rebel group in Yemen, which enjoys military support from Iran.

Dryad said a Chinese vessel was harassed by vessels claiming to be official naval patrols near Yemen.

"The Houthis have promised safe passage for Chinese and Russian interests in the Red Sea, but the militant group's forces have attacked vessels belonging to both countries," its Tuesday advisory read.

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