Longshoremen From Maine to Texas Are Set to Strike Tuesday. Expect Shortages and Higher Prices
September 27, 2024
A shutdown of the ports could become the most disruptive strike to the US economy in decades.
Via abcnews.com:
Tens of thousands of dockworkers are set to strike as soon as Oct. 1, potentially snarling dozens of ports along the East and Gulf coasts with major implications for the U.S. economy.
A shutdown of the ports would cost the economy up to $4.5 billion each day, according to a report from JPMorgan senior equity analyst Brian Ossenbeck.
The East and Gulf Coast ports account for more than half of U.S. container imports, facilitating the transport of everything from toys to fresh fruit to nuclear reactors, Ossenbeck found.
A strike lasting only a handful of days would wreak little damage, but a prolonged work stoppage of several weeks or months could drive up prices for some goods and cause layoffs at manufacturers as raw materials dry up, experts said.
“The supply chain will start to get shocked after a couple of weeks,” Adam Kamins, a senior director of economic research at Moody’s Analytics, told ABC News. “If it gets beyond that, we’ll start to see some much more signifiant implications.”
The International Longshoreman’s Association, the union which says it represents 50,000 East and Gulf Coast dockworkers under the contract at issue, did not respond to ABC News’ request for comment. The U.S. Maritime Alliance, or USMX, an organization bargaining on behalf of the dockworkers’ employers, declined to respond to a request for comment. The USMX claims that only 25,000 workers will be impacted by the work stoppage.
President Joe Biden retains the power to prevent or halt a strike under the 1947 Taft-Hartley Act. Trade organizations sent a letter to Biden earlier this month urging the White House to intervene.
In a statement to ABC News, a White House spokesperson said the Biden administration does not intend to intervene but is “monitoring and assessing” ways to address the potential impact of a strike for the nation’s supply chain.
“The president supports collective bargaining and believe it’s the best way for American workers and employers to come to agreement. We continue to encourage the parties to continue negotiating towards an agreement that benefits all sides and prevents any disruption. We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now,” White House spokesperson Robyn Patterson said in part.
Here’s what to know about how a dockworker strike could impact consumers and workers:
Higher inflation
A prolonged East and Gulf Coast port strike could moderately increase prices for a range of goods, experts told ABC News.
That upward pressure on prices would result from a shortage of products caught up in the supply chain blockage, leaving too many dollars chasing after too few items, they added.
Food products are especially vulnerable to an uptick in prices, since food could spoil if suppliers sent the products ahead of time to avert the strike impact as they have done for some other goods, Kamins said.
As much as 75% of the nation’s imported bananas come through ports on the East and Gulf Coasts, threatening the supply of a highly perishable product, Jason Miller, a professor of supply-chain management at Michigan State University, told ABC News.
“It’s simply infeasible to route those bananas through the West Coast ports,” Miller said.
A significant share of the nation’s imported auto parts come through the ports at issue in a potential strike, which could cause an increase in car prices if the strike persists for more than two weeks, Kamins said.
Potential price increases would likely be moderate but may nudge the Federal Reserve to hold off on interest rate cuts expected in the coming months, Kamins added.
“We’re not talking about prices skyrocketing by any means,” Kamins said, but even a few tenths of a percentage point tacked onto the annual inflation rate could scare off the Fed. “If it has an outsized effect on the consumer’s psyche and the Fed’s psyche, that in and of itself creates recession risks,” he said.
Manufacturing disruption and layoffs
A strike lasting a matter of months could cause a shortage of raw materials that brings some manufacturing activity to a halt, leading to layoffs at affected plants as well as in related industries such as shipping and logistics, some experts said.
“If there aren’t shipments to pick up, it would have a boomerang effect across the whole nation,” Bill Stankiewicz, owner of Georgia-based logistics consulting company Savannah Supply Chain, told ABC News.
At the heart of a potential disruption, shortages of parts would prevent manufacturers from assembling and shipping out final products, Miller said. The auto sector would be heavily impacted but the slowdown would affect “all types of industries,” he added.
“If you start having a very extended strike you’ll be looking at temporary layoffs because plants can’t get their parts,” Miller said.
Kamins echoed concern about manufacturing workers. Still, such an outcome would only result from a prolonged strike, he said.
In 2002, a strike among workers at West Coast ports lasted 11-days before then-President George W. Bush invoked the Taft-Hartley Act and ended the standoff. However, the last time East and Gulf Coast workers went on strike, in 1977, the work stoppage lasted seven weeks.
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