Massive strike expected to fray already fragile supply chain

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A strike by dockworkers at the U.K.'s most important port is threatening to deal a blow to supply chains already reeling from pandemic disruptions.

"It’s probably going to be an expense that we end up paying in the same way there were lots of knock-on costs of the ship that got stuck in the Suez Canal," Gary Grant, founder of the toy retailer The Entertainer, told Bloomberg of a massive potential strike the U.K.'s Port of Felixstowe.

About 2,000 employees at the port, the country's largest for containerized imports and exports, are set to strike for eight days, raising fears that the disruption could deal yet another large blow to an economy facing inflation woes and a possible recession. 

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Management are seen discussing the dispute with CEO Clemence Cheng (in orange vest and black baseball cap) near the main gate of Felixstowe port as an eight day strike, called by the UNITE trade union begins over pay on August 21. (Guy Smallman/Getty Images)

The port handles about a third of the country's total container volume and is the most important hub for the country's trade with Asia, and had made progress towards reversing dwell time issues that were brought on by the pandemic over the last two years. But that progress would be threatened by the strike, with estimates indicating it could take as many as 24 days to clear the backlog resulting from the labor dispute. Russell Group, a data and analytics company, says the strike could delay $800 million in trade.

The disruption could also ripple through the rest of the country's economy, delaying imported shipments to U.K. retailers as they ready for the busy holiday shopping season. Russell Group, a data and analytics company, says the strike could.

Shipping companies are already planning to reroute around the port, but such moves add time and costs. There are also doubts other ports in the country are equipped to handle a larger volume of trade.

The port of Felixstowe is deserted as an eight day strike, called by the UNITE trade union begins over pay on August 21, 2022 in Felixstowe, England. (Guy Smallman/Getty Image)

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"We shall of course do everything we can to support the UK supply chain, although it should be understood that we are currently delivering record volumes and there is minimal spare capacity," DP World, a company that owns the country's second-largest port in Southampton, told Bloomberg last week.

The workers appear ready to strike despite pleas from outside groups to settle the labor dispute, with the union most recently rejecting an 8% pay increase offer from the port.

"The port regrets the impact this action will have on UK supply chains," the company said, adding that the strike will result in "no winners."