LOCAL business leaders are breathing a sigh of relief after a last-minute agreement brought US East and Gulf Coast port operations back online. But in the days leading up to the resolution some supply chain managers were scrambling to secure alternative routes, while others prepared for potential shortages.

The uncertainty left companies bracing for disruptions, with some fearing that their pre-Christmas inventories might not hold.

For many local companies, the strike comes on the heels of other supply chain challenges that have forced them to build up inventories. James Rawle, chairman of Lasco Manufacturing, pointed out that his company was already dealing with disruptions at the Panama Canal, making the dock workers’ strike another strain on an already -stretched system.

“We’ve had to increase our inventories significantly to stay operational,” he said. “While we don’t yet feel the immediate effects of the US strike, the longer it drags on, the greater the risk of delays and cost increases.”

Lasco’s experience reflects a broader trend among Jamaican companies, many of which, like Rawle’s team, had been preparing for a difficult shipping environment long before the strike began.

With shipping delays persisting from the Panama Canal and uncertainties in global logistics, companies have been stockpiling goods, particularly in anticipation of the Christmas season. However, this preparation comes at a price, with increased warehousing costs and cash flow implications.

Rawle acknowledged the financial strain, saying, “We’ve had to rent additional warehouse space to store the extra inventory, which is driving up our working capital and stretching our cash flow — but it’s the only way to ensure we can keep products on the shelves during this turbulent period.”

GraceKennedy CEO Don Wehby echoed similar sentiments.

“We are managing well right now because we have solid inventories, delivering 94 per cent service levels,” he told the
Jamaica Observer. “But we’re in constant touch with shipping lines, discussing rerouting options for containers in transit.”

For GraceKennedy, the solution has been to stay ahead of the curve by using alternative shipping routes, including overland transfers and West Coast ports unaffected by the strike, the company said.

Despite these preparations, Wehby warned that if the strike had resumed or dragged on, the current cushion could disappear. “The longer the ports remained closed, the higher the risk of eventual stock shortages,” he admitted.

For now, however, many grocery retailers’ proactive approach has allowed them to maintain a steady flow of key products, helped by cautious overstocking following the pandemic and Hurricane Beryl earlier this year.

Wisynco’s CEO William Mahfood took a wait-and-see approach, pointing out that the strike hadn’t yet caused immediate issues for the company. “It hasn’t really kicked in. These things usually take weeks or even months to affect operations,” Mahfood explained.

He emphasised that while Wisynco relies heavily on imports, particularly from the US, the company hasn’t experienced major disruptions. “If they’re back at work in a couple of days, it won’t really have much effect,” he told Sunday Finance, adding that the bigger challenge for Wisynco in recent months has been navigating issues related to the Panama Canal.

However, Mahfood remains cautiously aware of the potential future disruptions.

“Once the effects begin to show, two or three weeks down the line, that’s when we could see some delays or shortages,” he said, noting the company’s reliance on a steady flow of goods through US ports.

Lingering Overstocks and Delayed Effects

Other companies, such as those who serve the tourism sector, have experienced a slower summer than expected, in part due to the aftereffects of Beryl, allowing them to maintain larger-than-usual inventories.

A supplier to tourism sector, who preferred not to be named, said his company had already built up stocks for the holiday season, particularly because they anticipated logistical challenges. “We were already overstocked from the pandemic and had started preparing for Christmas, so we’re in a good position now,” the representative said, noting that they haven’t yet felt the full force of the strike.

However, the representative was quick to add that this breathing room may not last. “It’s only a matter of time before we start seeing delays if the strike prolongs or if shipping schedules remain unreliable. But at this point, we feel prepared.”

Long-term uncertainty for Jamaican imports and exports

The true challenge for Jamaican companies may lie in the uncertainty surrounding the future of the US ports. In a press statement earlier this week Kingston Freeport Terminal Limited (KFTL) said it took steps to manage the strike’s fallout by halting the acceptance of additional cargo bound for affected US ports.

However, this precautionary measure is just a short-term fix. Exports destined for US ports on the East and Gulf Coasts remained in limbo, and companies will need to consider alternative shipping routes, which come with their own capacity constraints and higher costs.

While many importers have discussed turning to airfreight as an emergency option, the significant cost difference means this is only viable for high-value goods. As one industry insider put it, “We foresee some impact on the local market, particularly for U.S. imports and exports. While alternative routes are possible, they are far from ideal.”

For now, the immediate effects of the strike seem limited to logistical headaches and increased operational costs.

The strike, which began on October 1, 2024, was rooted in disputes between the International Longshoremen’s Association (ILA) and port operators over wages, automation, and working conditions. Union members argued that automation was threatening jobs and pushing them out of the labour market, while port authorities pushed for increased efficiencies to handle higher shipping volumes and meet the growing demands of global trade.

Following intense negotiations, a temporary agreement was reached, allowing workers to return to their posts. However, the settlement only offers a 90-day window for further discussions. The key issues—namely, wage increases and protections against job losses due to automation—remain on the table. Both sides are working to come to a long-term resolution.