How Labor Strikes Affect the Supply Chain

This month, President Biden celebrated an agreement between carriers and union leaders to avert a rail strike. General contention remains, however, as unions around the world continue to organize. As strikes are likely to occur again on a global scale, shippers must prepare to address how labor strikes affect the supply chain.

Today, trains move two-fifths of American freight and one-third of exports. If tens of thousands of rail workers had gone on strike this month, the shipping industry and its already-congested ports would have suffered massive consequences. Trucking companies, too, would’ve faced increased pressure and strain. In an economy already burdened by global sociopolitical crises, inflation, and climate change, a strike could wreak havoc. 

The weight of an American train load 

American trains are frequently used to move grain and corn out of the midwest. Railway labor strikes—aside from their direct impact on food supply chains—have a butterfly effect on global supply chains. Grain and corn are often exported to Asia and other parts of the world to be processed into cereals and livestock feed. Railway disruptions could spell disaster for shippers and air freighters who move goods in and out of Asia. A similar chain of operations drives the production of paint, cleaning products, and other goods. 

The rail system also moves crude oil from Canada to the United States, and gasoline from the United States to Mexico. Prior to the war in Ukraine, the Pacific Northwest imported large quantities of Russian oil. Now, the region depends on rail transport for oil from North Dakota.

But how much do labor strikes really affect the supply chain? According to the Association of American Railroads, a rail strike could result in losses of $2 billion a day. The CEO of Flock Freight likened the disruption to “half a million trucks going offline.”

The supply chain can’t take any more strain

Global economic disruption isn’t new: supply chains have suffered since the beginning of the pandemic, as demonstrated by labor shortages, port shutdowns, and rising container congestion. Growing port congestion in Europe has also disrupted global supply chains, with recent labor strikes in Germany leading to a pile-up of import containers. 

How to adapt when labor strikes affect the supply chain 

To prepare for future rail strikes or strikes in other industries, companies should explore transportation alternatives—including those by air and sea. One transportation disruption can easily upend others. 

Supplier diversification is another proven strategy. By working with suppliers in different regions, companies can mitigate risk and confidently respond to unanticipated setbacks.

Shippers can prepare for ongoing unpredictability by prioritizing flexibility and agility. CTSI-Global’s Honeybee TMS, which provides real-time data and thorough insights into every part of the supply chain, allows suppliers and logistics teams to adapt under pressure, secure the best rates and contracts, and build long-term relationships with a network of vetted carriers.

Don’t let the next supply chain disruption catch you by surprise. Contact CTSI-Global today to learn more about how you can prepare for strikes and other challenges.