As Yogi Bera put it, “it’s like déjà vu all over again.” October has arrived, and yet another event is happening that could have a significant impact on supply chains throughout the country.
As of October 1, the International Longshoremen’s Association has indicated that about 45,000 of its members are on strike, which would affect ports along the Gulf coast and east coast of the United States. This accounts for nearly half of the ports in the country, which could lead to significant disruptions in shipments crossing into the United States.
This strike and its effect on your supply chain, following within days of the significant impacts of Hurricane Helene, could require you to assess whether you must declare force majeure within your supply chain, and to be ready for such notices coming from others in your supply chain.
In order to adequately prepare for such disruptions, a review of your applicable contracts is the first step. Your focus should be on whether your contracts contain some sort of force majeure provision. Each provision can be different and may cover different events as qualifying for force majeure. You must determine whether these strikes and their impact on ports qualify, or whether you may be required to arrange for alternate transportation instead.
Second, different force majeure provisions require different forms of notice, cooperation, timing of notice and other such details that you must be aware of to make sure you provide proper notice if necessary, or to determine if the notice you receive complies with your force majeure provisions.
Third, you must determine your obligations and your rights if the port strikes impact your supply chain. Can your contract be terminated? Can the end customer obtain alternate products — and if so, who must pay for those? If supply is limited, but not completely unavailable, how should it be allocated — must one customer receive preferred treatment?
The answers to these questions are found within your contracts and the relevant legal doctrines, which not only supplement force majeure provisions but also determine the outcome for contracts lacking such provisions. Our Automotive and Supply Chain Industry Group attorneys are ready to advise and guide you through these issues as the strike hits. Please contact us with any questions or concerns.
