Already in 2013, Supply Chain Matters has noted a number of supply chain disruptions that have challenged procurement and transportation professionals. Efforts to reduce transport costs by selecting more economical transport options has led to the effects of decreased capacity and slower transit times for both global ocean container, and now, international airfreight movements. There was a brief dock strike involving major U.S. west coast ports in November, followed by the threat of work stoppage involving 40 U.S. east coast ports that was averted by mediation.
Now, the latest disruption involves the port of Hong Kong, the world’s third busiest ocean container port and a primary shipment gateway for consumer and electronics goods produced in China’s massive Pearl River Delta manufacturing region.
A port strike involving 450 workers has dragged into its seventh day and shipping lines are beginning to reroute ships to alternative ports. The Wall Street Journal reported that this strike is costing HIT $644,000 per day, not to mention the pending impact for shippers expecting their goods.
The port of Hong Kong is noteworthy for shippers in the region because of its more frequent connections to U.S., Europe and other Asia port destinations. Unions have traditionally had weak bargaining power at this port and thus container lines were obviously caught off-guard, not expecting a strike of any duration. Striking workers are seeking a 20 percent pay raise from the roughly $7 per hour they currently earn. These workers also complain of having to work 12 hour shifts without any work breaks.
The work stoppage involves a contractor to port operator Hutchinson Port Holdings Trust, which operates 16 ship berths at Kwai Tsing, Hong Kong’s major container port, including two through with a partnership with Cosco lines. According to press reports, the port operator obtained an emergency court order late Monday for striking workers to vacate the terminal premises. Reports indicate that dockworkers have since relocated outside the entrance but are refusing to yield to threats of being fired.
The New York Times indicates that vessels that were scheduled to dock at the port are experiencing delays as long as 60 hours with likely ripple effects across the global supply chain. Taiwan based Evergreen Line is reporting that as of Wednesday, 10 of its ocean container vessels are in the port waiting for berths, while an additional 20 vessels are floating offshore waiting. Some are in the process of being re-routed to the ports of Skekou in China or Khaosiung in southern Taiwan. In its reporting, the WSJ indicates that some operators are now considering avoiding the port altogether until conditions return to normal.
Needless to state, procurement and supply chain teams should be exercising their disruption scenario plans regarding the real threat of additional delays for inventories that are scheduled for transit utilizing the port of Hong Kong. Depending upon the eventual length of this disruption, multiple industry supply chains could be impacted in the planning of summer inventory needs.