Volkswagen Group of America is already experiencing disruptions due to the ongoing port strike affecting the East and Gulf Coasts, but the company has contingency plans to divert shipments to alternative U.S. ports that remain operational. The strike, which began on October 1 and spans from Texas to Maine, involves port workers represented by the International Longshoremen’s Association and could disrupt supply chains for weeks if it continues.
Anu Goel, Executive Vice President for After Sales and Services at VW Group of America, warned that a week-long strike could affect Thanksgiving and cause delays in delivering new cars and light trucks, especially for European manufacturers relying on East Coast ports.
Volkswagen is feeling the strain at its key shipping facilities in Baltimore and Jacksonville, which are currently closed due to the strike. Although the company can process vehicles already at these facilities, it cannot unload new shipments. A typical vessel carries between 3,000 and 4,000 vehicles, and the inability to unload them adds to the logistical challenge.
Additionally, the automaker has some flexibility in rerouting shipments. Its facilities in Freeport, Texas, and Davisville, Rhode Island, remain open because local unions there have not joined the strike. Goel noted that redirecting vessels from closed ports to these alternative locations takes five to seven days. If the strike persists into next week, Volkswagen plans to begin diverting shipments to these open ports.
Redirecting shipments to West Coast ports in California is also an option but comes with additional costs, as it would require rail and transport carriers to move vehicles across the U.S., a costly and complex process. “Supply chain management is all about positioning equipment in the right place,” Goel explained. “And we can’t control what competitors do.”
Drawing on his 23 years of experience at Ford, Goel emphasized the importance of preparation. Volkswagen anticipated the possibility of a strike and began padding its parts inventory two to three months ago. Roughly 70% of VW’s service parts come from Europe, with most entering through the port of New Jersey. An additional 15% arrive from Mexico by rail, while the rest are sourced from within the U.S.
“We increased inventory on our fastest-moving parts and made sure to clear as many containers from the ports as possible before the strike deadline,” Goel said. Despite these efforts, the strike’s effects are immediate, and if it continues, the situation could worsen, especially with competitors implementing their own contingency plans.
Goel hopes that the strike will be short-lived, but he acknowledges that new logistical challenges will arise even after a resolution. Port operators will have to determine unloading sequences for a backlog of vessels that need to be unloaded. “Everyone wants to be first in line,” Goel said, adding that some level of government oversight in the process would be beneficial.
The outcome of the negotiations between the port workers’ union and employers remains uncertain, but Volkswagen, along with other automakers, is closely monitoring the situation as it continues to unfold.
