Friday Focus: Are companies prepared for a summer of discontent?

With governments across Europe announcing austerity measures as they seek to cut national debt and private companies look to manage their way out of the recession by cutting costs, it was inevitable that there would be plenty of industrial action taking place this year.

So far this year industrial action has hit ports, airports, airlines, shipping lines and haulage firms.

Just yesterday (12 August), staff at airport operator BAA voted in favour of strike action that could close Heathrow and five other UK airports.

And with many companies operating just-in time supply chains, it is important that logistics firms keep cargo moving even when the services offered by airlines, trucking firms, ports or shipping lines grind to a halt.

The International Transport Workers Federation (ITF) tells IFW that the transport industry is highly unionised, making it more susceptible to industrial action than other industries.

ITF General Secretary David Cockroft says: “It’s not a secret that in a recession some employers will look for a quick way of cutting costs by attacking wages or staffing levels.

“Transport is a highly unionised sector and kneejerk cuts are likely to be resisted.”

In this week’s IFW poll, 63% of 325 respondents felt that logistics companies were well prepared for a summer of industrial action.

But that still leaves 37% of respondents that felt logistics companies aren’t prepared to deal with the affects of strikes.

One company that feels it is prepared is CEVA Logistics. A company spokesperson says: “We believe we are prepared for any eventuality as demonstrated during the recent volcano crisis when we were able to demonstrate our flexibility by continuing to operate a virtually full inbound schedule from Asia and the US into Europe.

“There has been a considerable amount of speculation that the Air Traffic Control authorities and various airlines are potentially faced with industrial actions and we are prepared for the eventuality of this happening.”

“CEVA has a global contingency plan and flexible relationships with our preferred carriers that will allow us to maintain services both to and from all major origins and destination throughout each region.

“Where necessary we are completely self-sufficient with the utilisation of our own in-house charter division that allow immediate deployment of leased aircraft to areas where commercial lift becomes a challenge.

“With the strength of our ground network we are not dependent on moving freight by third-party hauliers. We therefore have a significant greater independence than the vast majority of our competitors.

“It should also be considered that with the amount of global logistics warehousing facilities at our disposal we are able to provide direct delivery and collections with storage facilities for clients should we need to implement our own revised flight schedules.”

TNT says it has contingency plans in place for the possible BAA strike action: “We have a number of airport gateways in the UK and we do have, we believe, ample alternatives if the strike goes ahead, particularly at Stansted and Edinburgh.

“In terms of Heathrow, we would have our cargo go to other international airports like Frankfurt, Charles de Gaulle, Brussels or Amsterdam, and then bring it into the UK via our Liege hub.

“If it was destined to come through Heathrow we would re-route it to another air gateway, and vice versa if cargo was being exported through Heathrow, we would try and take the cargo out through our hub in Liege and onward to their destinations.

“It’s not ideal but we have got plans in place which would minimise the impact of any disruption, but inevitably there would be some negative impact on our services.”

But TNT warns that other companies may also seek to use alternative airports in light of strikes, which could cause congestion.

But it adds: “We believe we have got more flexibility than some of our competitors because we have got six or seven air gateways in the UK that we can utilise, whereas I think some of our competitors have got a choice of maybe two.”

A spokesman for Lufthansa Cargo tells IFW: “As we have already proven during the ash cloud we are able to replace most of the intra-European flights by road feeder services - and will then extend our truck network from and to those destinations. This can also be done on short notice.”

In IFW’sLinkedIn group discussion, one member suggested transport companies could prepare for industrial action in the following ways:

-Fully understand the dependencies within the supply chain, such as expanding their range of logistics, freight, financial and consulting services.

- Identify the weak links within their supply chains.

-Develop the ability to design logistics systems and formulate integrated supply chain strategy, so that all components are synchronised and tuned to fit corporate strategy, competitive realities and market needs.

-Develop an understanding of key drivers of supply chain performance and their inter-relationships with other functions of the company such as marketing, manufacturing, accounting and overall strategy.

But the best way to stop cargo being delayed by industrial action is to avoid the industrial action happening in the first place.

Cockroft says that to avoid industrial action, companies should talk to workers rather than just announce cuts in wages or working conditions.

“Employers would be much better off talking to their workforce and seeing how good practice can be promoted, and efficiencies, new ideas and economies identified by everyone concerned,” Cockroft says.