As the strike at U.S. East Coast and Gulf Coast ports stretches into its third day, major retailers including Levi Strauss, Costco, and Walmart are rushing to implement alternative shipping strategies to ensure goods arrive in time for the peak holiday season. The ongoing strike, the largest dockworker strike in nearly 50 years, has halted unloading operations at key ports, causing long lines of container ships and threatening to disrupt supply chains for essential goods like bananas, coffee, and auto parts.
Retailers, which account for roughly half of all container shipping volume, are scrambling to adjust their logistics. Levi Strauss, which imports the majority of its products into the U.S. via the East Coast, is rerouting shipments to the West Coast and utilizing air freight to avoid delays. With 1,172 company-operated stores worldwide, Levi is taking proactive measures to maintain inventory flow ahead of the holiday shopping rush.
Similarly, Costco announced contingency plans last week, including pre-shipping holiday goods and preparing to use alternative ports. Other companies like Newell Brands, the maker of Rubbermaid products, have reached out to retailers like Walmart and Lowe’s, offering to ramp up production of domestically manufactured goods if necessary. Newell CEO Chris Peterson stated the company is prepared to increase production by as much as 50% in the short term, and 20% in the medium to long term, if required.
The strike is also affecting coffee shipments, which primarily enter the U.S. through East Coast ports. J.M. Smucker, the maker of Folgers coffee, has already started adjusting production schedules and inventory plans to manage potential supply chain disruptions.
Experts warn that the strike could cause shortages of goods, particularly if it continues into the holiday season. “If the strike lingers, it will be difficult for retailers to form a Plan B without fear of being stuck with excess inventory once the strike ends,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
Toymakers Mattel and Hasbro, however, appear less vulnerable as they rely on West Coast ports, particularly Los Angeles, for their shipments from China. Walmart and Home Depot have also indicated that they have contingency plans in place to address supply chain disruptions.
While some consumers have reportedly begun stockpiling essentials like paper towels and canned goods, industry experts warn that panic buying could lead to price increases. BNP Paribas economist Yelena Shulyatyeva expressed concerns over the potential impact on inflation, citing memories of supply chain disruptions during the COVID-19 pandemic.
As retailers brace for continued disruptions, the holiday shopping season could face challenges if the strike drags on, affecting inventory availability and pricing strategies across various sectors.