Ports, Labor Disputes, and Your Apparel Supply Chain

Recent troubles at ports worldwide have slowed the transit of goods to a halt — whether it’s labor or capacity issues, it seems like you can’t go a week without hearing about one port or another shutting down operations. The best recent example was the work slowdown at America’s West Coast ports over the past few months.

In February, the International Longshore and Warehouse Union (ILWU) started a work slowdown at 29 ports across the West Coast over contract renegotiations. The dispute was incredibly expensive, costing the US economy over $2 billion every day. And this slowdown definitely wasn’t the last — East Coast ports are on track for a similar contract renegotiation in just a few years, and the situation worldwide isn’t any better. With ongoing labor disputes at ports worldwide, what can you do to keep your apparel supply chain on track?

Maximize Your Apparel Supply Chain Visibility

Before you can appropriately manage your apparel supply chain and protect it from port delays, you must figure out exactly what inventory you’re holding and where it needs to go. Supply chain visibility is the top-down knowledge of how much inventory you have available, where it’s located, and where that inventory will eventually be needed.

There are a number of different ways to improve your supply chain visibility, from training your warehouse employees to updating your apparel ERP software solution. Whichever methods you use, make sure a part of your plan is to create a comprehensive overview of the key components that keep your business running. Once you identify the most important aspects of your supply chain, you can make informed choices about where you spend additional shipping money on insurance or air freight.

Switch to Air Freight

One of the simplest ways to keep your apparel supply chain out of trouble is to avoid ports altogether by switching to air freight. In a perfect world, air freight wouldn’t be prohibitively expensive, but if you have some items that are vital to your business, it’s worth considering the extra expense.

During this February’s west coast ports disruption, Honda Motors started shipping key auto components via air as a way to prevent even more costly shipping delays. If you do decide to shop via air freight, make sure to check with different providers and get the best deal possible — it can be the difference between saving time and money and spending an unnecessary wad of cash.

Purchase Trade Disruption Insurance (TDI)

While almost anyone shipping overseas purchases maritime insurance in case of loss of or damage to their goods, very few take advantage of a new type of insurance designed to protect you from apparel supply chain disruptions. Trade Disruption Insurance (TDI) policies cover the loss of gross earnings and extra expenses incurred by a political or labor dispute such as a work slowdown, embargo, or nationalization of a company.

TDI delivers the biggest benefits to companies with a global presence who depend on reliable delivery of key components from different parts of the world. Ken Shimamura, secretary-treasurer of Sunrock Risk Services Corp., shared a concrete example of what TDI can mean for an apparel supply chain:

“For example… a clothing retailer in the U.S. has its goods manufactured in Asia. A major earthquake closes the port through which the goods normally are shipped. In order to get the goods to its stores in time for the sales season, the retailer incurs additional expense in rerouting the goods through other ports and via airfreight. TDI responds to the extra shipping expense and any loss of revenue resulting from any delay in the receipt of goods due to the consequences of the earthquake.”

Implementing these strategies can help you gain better control over your apparel supply chain and bypass costly labor disputes and port slowdowns. If you’ve tried everything but still can’t get a handle on your supply chain, Apparel Business Systems can help.

Our apparel ERP software solutions give you unparalleled access to every facet of your supply chain, and our expert consultants can help you make the necessary changes to get things running smoothly. Contact us today for more information!