By Tom Ryan
Source: retailwire.com, September 2024
Longshore workers at ports from Maine to Texas are set to walk off the job early next Tuesday, promising significant disruptions in trade flows in the first East Coast dock strike since 1977.
The two sides — the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA) — haven’t bargained since June in a dispute largely over wages and a union-proposed ban on increased automation of port cranes, gates, and trucks that could cost jobs.
According to the National Association of Manufacturers, over 68% of containerized exports and 56% of containerized imports pass through ports along the East and Gulf Coasts, amounting to an average daily trade value exceeding $2.1 billion.
Holiday selling isn’t expected to be impacted as freight was brought in earlier or diverted to the West Coast. Those moves sent U.S. imports to multi-year highs in July and August, exacerbating a shipping price increase tied to rerouting vessels around Africa to avoid rebel attacks on ships near the key Suez Canal trade shortcut.
However, even a short strike could lead to significant disruptions in regional trade flow. JPMorgan transportation analysts project that a strike could inflict a $5 billion daily loss on the economy, equivalent to around 6% of daily GDP. They further estimate that for every day the ports remain closed, it would take approximately six days to clear the resulting backlog.
A prolonged strike lasting a month would almost certainly hurt the U.S. economy, leading to shortages of consumer and industrial goods as well as higher shipping costs, driving up prices just as U.S. inflation normalizes.
Among consumer products, agricultural impacts such as the imports of fruits or exports of soybeans and soybean meal would be felt. About two-thirds of bananas in the U.S. arrive in East Coast ports. However, even more significant impacts would be felt on the chilled or frozen meat products and eggs, which require refrigerated containers that cannot sit for long. Knitted and non-knitted apparel, furniture, plywood, wine, and pharmaceutical products also land among the categories that would be particularly impacted by the strike.
Additionally, the disruption in parts supply for U.S. factories could force some plants to halt operations and result in temporary layoffs. Increased traffic at operational West Coast ports is expected, leading to congestion, while a backlog of ships would likely accumulate. Once the Longshoremen’s union resumes work, shipping costs could remain elevated, mirroring the challenges seen during the 2021 supply chain crisis.
“People are paying whatever they can to make sure they’re in the front of the queue,” Ronnie Robinson, chief supply chain officer at DSW parent company Designer Brands, told Reuters.
The threatened strike arrives five weeks before the presidential election. President Biden has signaled that he doesn’t plan to intervene in a potential strike through the Taft-Hartley Act, but he has been urged by the National Retail Federation (NRF) and 177 trade groups representing retailers, manufacturers, farmers, automakers, and truckers to facilitate negotiations and step in to prevent disruptions.
NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement, “A strike would be another blow to the supply chain as it continues to face challenges, and to the nation’s economy at a time when inflation is finally coming down and the Fed is poised to lower interest rates.”
