WEEK 44 TOP 5: DISRUPTION TO SUPPLY CHAIN WATCHLIST No.210

- (Following No.209) Media reports indicate that Iran is preparing to retaliate for recent Israel Defense Forces (IDF) strikes near its territory, potentially by launching one-way attack drones and ballistic missiles from Iraq. According to The New York Times, Iranian Supreme Leader Ali Khamenei ordered the Iranian Supreme National Security Council on October 29 to devise plans for a retaliatory strike against Israel. Israeli sources cited by Axios have indicated that Iranian-backed militias in Iraq could launch a significant number of drones and ballistic missiles targeting Israel in the coming days.

Axios also reports that the Biden administration is increasing pressure on the Israeli government to comply with U.S. demands aimed at addressing the humanitarian crisis in Gaza.

According to a U.S. official, if Israel does not fully implement these measures by November 13, the U.S. may suspend military assistance—a step the administration has so far avoided but is gaining support within the State Department.

On October 28, a Liberia-flagged bulk vessel, the MOTARO, reported three explosions in close proximity. Fortunately, the vessel sustained no damage, and all crew members were reported safe. The ship will proceed to its next scheduled port of call.

In line with projections, the Shanghai Containerized Freight Index (SCFI) rose by 5.4% this week, marking the second consecutive week of increases following a 15-week decline. Additionally, Drewry’s World Container Index climbed 4%, reaching $3,213 per 40ft container.

Disruption: escalation between Israel and Hezbollah/Lebanon continues to present significant risks, the broader Middle East situation remains complex, further intensified by the implications of the upcoming U.S. general elections

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- (Following No.205) On October 31, unionized longshoremen represented by the Canadian Union of Public Employees (CUPE) - Local 375 - will initiate an indefinite strike at Termont Corporation’s Viau and Maisonneuve container terminals at the Port of Montreal. This move follows previous strikes, driven by the union’s push for stable work schedules. While the wage component is nearing a resolution, union leaders emphasize that securing predictable work hours remains essential. They are prepared to withdraw the strike notice if an agreement on work rules is reached.

The strike has the potential to disrupt approximately 15% of the port's container volume. With the holiday season approaching, the Canadian Federation of Independent Businesses (CFIB) has expressed concerns over potential impacts on small and medium-sized businesses and has called for federal intervention.

Termont advised truckers to collect import containers by 10:00 p.m. on October 30, with extended gate services available to facilitate timely clearance.

Disruption: cargo delays expected for an indefinite period, impacting shipments through the Viau and Maisonneuve terminals at the Port of Montreal

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- (Following No.197) On October 29, port employers in British Columbia and the foreperson’s union, the International Longshore and Warehouse Union (ILWU) Local 514, resumed contract negotiations, aided by federal mediators. This development follows a recent ruling by the Canada Industrial Relations Board (CIRB) that found the union acted in bad faith by introducing a minimum manning proposal late in the bargaining process, complicating discussions. The union’s strike mandate, approved in July, is set to expire on November 2. Union president Frank Morena has indicated cautious optimism for reaching a deal but stressed that the union is prepared to take action if necessary.

On November 1, the BC Maritime Employers Association (BCMEA) announced on its website that ILWU Local 514 had issued a 72-hour notice for an industry-wide strike set to begin at 8:00 a.m. (PT) on November 4.

In response, the BCMEA declared a “defensive lockout” impacting all British Columbia ports, emphasizing that this decision was not taken lightly due to its potential consequences for the supply chain and regional trade.

Disruption: a lockout starting November 4 at the ports of Vancouver and Prince Rupert, with potential disruptions to cargo movement lasting days or weeks if no government intervention or agreement is reached

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- Severe flooding in Valencia, Spain has caused major disruptions across port operations and domestic transportations. All depots in the region had temporarily closed due to electricity outages and access issues. Heavy rainfall and adverse weather conditions in Spain have led to multiple closures, hindering access to roads and ports and halting transport activities. Terminals and depots in the Port of Valencia were shut on October 30 due to severe weather.

On October 31, the Port of Valencia confirmed that terminals operated by CSP Iberian Valencia Termina (CSP), MSC Terminal Valencia (MSCT), and APM Terminals had resumed operations. However, as of November 1, ports are facing reduced staffing as road and access restrictions continue to impact the area. Rail services are currently running at limited capacity, with trains expected to remain idle until Monday, November 4, pending infrastructure repairs.

Disruption: congestion and delays at the Port of Valencia, domestic deliveries across eastern Spain likely to be disrupted

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- Following a crucial meeting on November 1 with French Transport Minister, French labor unions declared their readiness to strike in response to the confirmed government decision to dissolve Fret SNCF by year-end. This announcement has escalated tensions, as unions—including CGT, UNSA, SUD-Rail, and CFDT—have strongly opposed the government's plan. They promptly initiated an industrial relations procedure aimed at preventing labor conflicts and strengthening their leverage. The unions are advocating for a suspension of the dissolution, emphasizing that strike action could be used to escalate their demands if necessary.

Disruption: potential strikes could severely disrupt French railway operations