News

Another logistics headache on the horizon for the US?

11 October 2023 By Sarah Neish

With the dockworkers union on the West Coast filing for bankruptcy, will the drinks trade see another slowdown of shipments?

The International Longshore and Warehouse Union (ILWU), which represents 22,000 dock and warehouse workers at key ports along the West Coast of America from San Diego to Washington state, has filed for bankruptcy.

The step is the latest chess move in an ongoing legal dispute, which has seen the union sued by the Oregon branch of the International Container Terminal Services (ICTSI) over illegal work stoppages and slowdowns by the union’s members amid labour disputes.

In 2019 a federal court ruled that the union must pay US$93.6 million (a sum that was later reduced to US$19.1 million) in damages to ICTSI Oregon for sanctioning illegal work slowdowns and stoppages between 2013 and 2017.

However, the dockworkers union argues that any damages paid should not exceed US$3.9 million, and says it lacks funds to cover ongoing legal expenses.

In filing for bankruptcy, the union will be permitted to restructure its company debts, which ICTSI Oregon claims is the union’s “latest manoeuvre to avoid accountability.”

Willie Adams, president of the union, explained: “At this point, the union can no longer afford to defend against ICTSI’s scorched-earth litigation tactic.”

The union’s attorneys filed the bankruptcy notice in federal court in Portland on Monday 2 October. The litigation is now unable to proceed until the bankruptcy case is dismissed or closed.

How might this impact shipments?

According to Horst Mueller, global head of VinLog (Kuehne+Nagel’s beverage specialist), while there is no immediate cause for alarm, drinks companies should remain watchful.

“It is not believed that the bankruptcy filing by the ILWU will disrupt normal business operations at US West Coast ports,” he told db. “However it is best to stay aware of how the case proceeds given that conditions and the ILWU’s actions could change.”

Any shipping issues that do arise from the bankruptcy will come as a blow given that global shipments have only just started to get back on track following years of delays and disruption. In August, db reported that financial losses caused by shipping delays had halved in 2022 compared with 2021.

In April 2023 Kingsland Drinks announced its revenue had fallen by 6% due to “considerable operational challenges for global supply chains” as the world emerged from the Covid pandemic, which director Andy Sagar said had made it “extremely challenging… to trade efficiently owing to the disruption from shortages of vessels, lack of container and port closures.”

The dockworkers’ union is not the only large-scale logistics operation to file for bankruptcy this year. In August, a frantic bidding war was sparked when major US freight company Yellow Trucking announced it was filing for bankruptcy.

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