"I will cripple you, and you have no idea what that means."
Harold Daggett’s words weren’t just a warning; they were a threat wrapped in certainty, delivered with the weight of someone who knew exactly what he was capable of. "Construction workers get laid off because materials aren't coming in. The steel's not coming in. The lumber's not coming in." The head of the International Longshoremen's Association wasn’t bluffing. Ports were already teetering on the brink, caught between the demands of modernization and the relentless pushback from unions unwilling to let automation erase their way of life.
On the other side, port operators knew they couldn’t back down. Without modernization, U.S. ports risked losing their cost competitiveness in the global trade ecosystem. Automation was no longer optional—it was a necessity to maintain pricing power and efficiency. Both sides were staring down an existential threat, locked in a high-stakes standoff where no one could afford to flinch first.
The October strike was just the opening move in a larger war over the future of U.S. ports. For businesses reliant on imported materials, it was a ticking time bomb.
One person who understood the stakes better than most was John, a CFO of a mid-sized construction company. John’s company relied on imported hot rolled coil from Europe—steel that was critical to projects ranging from urban skyscrapers to suburban infrastructure. Like many companies in the industry, they ran a lean operation, with just-in-time inventory systems to keep costs down. The strike exposed just how precarious that strategy could be.
The thought of steel shipments trapped offshore kept John awake at night. If the strike dragged on, domestic suppliers would have no hesitation jacking up prices, and John’s company would have no choice but to pay the premium. Missed deadlines and blown budgets loomed as real possibilities.
John didn’t like leaving things to chance. Faced with this uncertainty, we presented him with a strategy designed to hedge against the potential fallout: long futures on U.S. hot rolled coil. Despite the headlines and growing tensions, the futures market for steel hadn’t moved. Traders seemed content to assume the strike would be short-lived. But John wasn’t
convinced.
This wasn’t just about steel stuck on ships; it was about survival on both sides of the labor dispute. The ILA was entrenched, fighting to block automation and preserve their workforce, while port operators were under immense pressure to modernize to stay competitive. The possibility of a prolonged strike, or a repeat showdown in the near future, couldn’t be ignored.
By positioning with long futures, John effectively gave his company a hedge against skyrocketing steel prices. If the strike resumed or escalated, the futures would protect against inflated costs. If it resolved quickly, the downside was negligible—futures prices were already flat. It wasn’t just about the immediate crisis; it was about preparing for any future disruptions, including risks like tariffs or sudden trade barriers.
“Smart move,” his CEO said, nodding as John presented the approach to the board. John wasn’t just mitigating risks; he was positioning the company as a step ahead of competitors, ensuring they could weather volatility without sacrificing margins or their reputation for reliability.
The October strike lasted only a few days before both sides agreed to defer the conflict until January 15th, effectively kicking the can down the road and leaving the problem to the next administration. The immediate threat had passed, but the underlying issues remained unresolved. Both sides were still staring down their existential threats, and the potential for a prolonged strike in January hung like a sword over steel-reliant industries.
John’s approach was a testament to the power of proactive risk management. Hedging strategies like this aren’t just for strikes—they’re also critical for navigating tariff risks, geopolitical uncertainty, and other supply chain disruptions that can turn markets on their heads overnight.
Opportunities like this don’t announce themselves. They require sharp analysis, strategic foresight, and the courage to act before others see what’s coming.
If you’re ready to explore how to protect your business from volatility and position yourself for long-term success, reach out to us today.
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