At midnight on October 1, 2024, longshoremen and harbor workers at major East Coast ports went on strike, causing significant disruptions to the flow of goods and materials of all sorts, including those essential for the construction industry. The strike has brought operations at ports like New York, New Jersey, Charleston, and Savannah—key entry points for a wide array of construction materials—to a standstill.

The construction industry relies heavily on imported materials, many of which enter the U.S. through East Coast ports. For contractors, subcontractors, and suppliers, the impact is likely to be felt across the country. Delays in critical shipments can affect project schedules, material costs can dramatically , and the potential for long-term disruptions could be significant. But don’t take my word, just listen to the words of Harold Dagget, the President of the International Longshoremen’s Association, who says the strike will “cripple” the economy, including the construction industry:

What Led to the Strike?

The strike stems from a breakdown in negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX), which represents port operators and shipping companies. Central to the dispute are concerns over wages, healthcare benefits, working conditions, and the increasing automation of port operations, which union members believe threatens job security.

After months of failed negotiations, union members at major East Coast ports walked off the job, bringing cargo handling to a halt at some of the most important trade hubs in the U.S. The strike has not only impacted East Coast ports but is also affecting distribution centers and inland terminals that rely on the steady flow of goods through these key ports.

Impact of the Strike on the Construction Supply Chain

With port operations suspended, contractors can likely face delays in the arrival of critical supplies. The materials most likely to be affected by the strike include:

• Steel and Metal Products: Structural steel, rebar, and sheet metal, commonly imported from Europe, Asia, and South America, are critical for framing, reinforcing concrete, and other foundational elements of construction projects.
• Lumber and Engineered Wood: While much of the lumber used in construction comes from domestic sources, significant quantities of engineered wood products like plywood, oriented strand board (OSB), and laminated timber are imported from Canada, Europe, and South America. These materials are crucial for framing, flooring, and sheathing in various types of construction.
• Plumbing Supplies: Copper tubing, PVC piping, and fittings—frequently sourced from Europe and Asia—are essential for the installation of plumbing systems. Delays in receiving these materials can halt mechanical and plumbing work.
• HVAC Equipment and Electrical Components: Many HVAC units, ductwork components, electrical wiring, switchgear, and transformers are imported, often from China and other parts of Asia. Without these critical components, contractors face delays in installing building systems.
• Tile, Stone, and Flooring Materials: High-end finishes such as marble, granite, ceramic tile, and hardwood flooring are commonly imported from Europe and Asia. Delays in receiving these finishing materials can impact the final stages of construction projects.
• Fasteners and Hardware: Nails, screws, bolts, and other hardware, often imported in bulk from international manufacturers, are essential for construction. Even small shortages of these items can cause significant slowdowns.
• Specialty Construction Materials: Items such as insulation, glass, adhesives, and coatings are also affected, especially custom or specialized products that are difficult to source domestically.

With a large volume of these goods stuck in containers that remain unloaded at East Coast ports, contractors could face delays, increased costs, and shortages, all of which threaten the profitability and completion of projects.

Five Practical Tips for Contractors to Address Supply Chain Disruptions

Although the strike is beyond contractors’ control, there are several steps that can be taken to manage the resulting supply chain disruptions and protect project timelines and budgets:

1. Diversify Your Supply Chain

Relying heavily on East Coast ports for construction materials exposes contractors to significant risk during labor strikes like this one. Consider sourcing materials from alternative ports such as those on the Gulf Coast (e.g., Houston) or even the West Coast. Additionally, explore relationships with domestic suppliers or manufacturers that can provide materials without relying on imports. While alternative sourcing may come with higher costs, it can help mitigate extended delays.

2. Communicate Transparently with Stakeholders

Frequent and clear communication with project owners, subcontractors, and suppliers is essential during supply chain disruptions. Keep all parties informed of potential delays, changes in project timelines, and any new costs that arise due to material shortages. By being proactive in your communication, you can manage expectations, foster trust, and potentially negotiate new deadlines or contract terms to account for unforeseen delays caused by the strike.

3. Review and Adjust Your Contracts

Now is the time to review your contracts to ensure you’re protected against penalties or delays resulting from the strike. Focus on force majeure clauses and provisions related to delays and material price escalation. A well-drafted force majeure clause may offer relief if the strike is considered an unforeseeable event beyond your control. Additionally, consider adding language to future contracts that allows for extensions or price adjustments in the event of supply chain disruptions.

4. Build Up Inventory Where Possible

A “just-in-time” inventory strategy can be risky during times of supply chain instability. Consider shifting to a “just-in-case” approach by stockpiling critical materials where possible. While it may increase short-term expenses, having essential materials on hand can prevent costly project delays later. Evaluate which materials are most critical to your upcoming projects and secure as much of them as you can, even if it means paying more upfront.

5. Seek Legal and Financial Advice

The complexities of a disrupted supply chain may necessitate professional guidance. Consult with legal counsel to review your options for mitigating delays, exploring potential claims, and handling contract disputes related to the strike. Additionally, financial advisors can help manage the strain on cash flow caused by material shortages or increased costs. You may need to secure short-term financing, adjust payment terms with suppliers, or renegotiate contract milestones to maintain financial stability during this disruption.

Managing Supply Chain Disruptions Amid the East Coast Ports Strike

The October 2024 East Coast ports strike is just beginning to cause challenges across the states. Delays in the delivery of key materials, shortages, and rising costs can create a perfect storm for contractors, subcontractors, and suppliers alike. However, by diversifying supply chains, communicating clearly with stakeholders, reviewing contracts, stockpiling critical materials, and seeking professional legal and financial advice, you can mitigate the impact of these disruptions on your projects.