US ports from Maine to Texas could close on Tuesday if a union representing about 45,000 port workers goes on strike.
A prolonged shutdown could push up commodity prices across North America and potentially cause shortages and price increases at retailers both large and small as the holiday shopping season approaches — along with a tight presidential election.
“First and foremost, we can expect delays in the market. These delays depend on what the goods are, what the priorities are at the ports, and how quickly things move,” said Mark Baxa, president of the Council of Supply Chain Management Professionals.
What are the issues in the dockworkers strike?
The International Longshoremen’s Association is demanding much higher wages and a complete ban on the automation of cranes, gates and container transport trucks used to load or unload cargo at 36 US ports. These ports handle nearly half of the country’s shipload.
The contract between the International Longshoremen’s Association and the American Maritime Alliance, which represents the ports, expires on Tuesday. The two sides have not held negotiations since June. The ILA workers’ strike will be the first organized by the union since 1977.
“Ocean Carriers represented by USMX wants to enjoy the rich $1 billion profits it will make in 2024, while offering ILA Longshore workers an unacceptable wage package that we reject,” the ILA said in a statement on Monday.
The Associated Press has reached out to a USMX spokesperson for comment.
What ports are affected?
While any port can handle any type of cargo, some ports specialize in handling cargo specific to a particular industry. Ports that will be affected by the closure include Baltimore and Brunswick, Georgia, the busiest automobile ports; Philadelphia, which prioritizes fruits and vegetables; and New Orleans, which handles coffee, mainly from South America and Southeast Asia, various chemicals from Mexico and Northern Europe, and wood products such as plywood from Asia and South America.
Other major ports affected include Boston; New York/New Jersey; Norfolk, Virginia; Wilmington, North Carolina; Charleston, South Carolina; Savannah, Georgia; Tampa, Florida; Mobile, Alabama; And Houston.
Can the government intervene?
If a strike is deemed a risk to America’s economic health, President Joe Biden can, under the Taft-Hartley Act of 1947, seek a court order for an 80-day cooling-off period. This would suspend the strike.
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But Biden, speaking with reporters on Sunday, said “no” when asked if he planned to intervene to plan for a potential work stoppage affecting East Coast ports.
“Because it’s collective bargaining, I don’t believe in Taft-Hartley,” Biden said.
How will this affect consumers?
The strike may last for weeks or months. If the strike is resolved within a few weeks, consumers will likely not notice any significant shortages of retail goods.
But the strike, which has lasted more than a month, is likely to cause shortages of some consumer products, even though most holiday retail goods have already arrived from abroad. Shoppers can see higher prices on a wide range of goods, from fruits and vegetables to cars.
Retailers are making contingency plans
Since major supply chain disruption in 2021 due to pandemic bottlenecks, retailers have adapted to supply chain disruption as “the new norm,” said Rick Haas, owner of a small chain of Patina Gift Shops in and around the Twin Cities, Minnesota.
“The best approach for Patina is to secure orders early and place goods in our warehouses and back rooms to ensure we have stocks of key goods,” he said.
Daniel Vasquez, who owns Dynamic Auto Movers in Miami, Florida, which specializes in importing and exporting vehicles, has increased inventory, specifically for cars that take longer to ship, in anticipation of the strike.
It also stopped relying on one port or shipping partner and expanded its relationship with small ports and shipping companies that can bypass congested areas.
“This move gives us an advantage – having backup partners means we can efficiently reroute shipments if the strike hits hard,” he said.
How will the strike affect holiday shopping?
Jonathan Gould, vice president of supply chain and customs policy at the National Retail Federation, the country’s largest retail group, said the potential strike comes as the supply network still faces challenges from ongoing Houthi attacks on commercial shipping that have essentially shut it down. . Use of the Red Sea and the Suez Canal.
The uncertainty also comes during peak shipping season for retailers, which typically lasts from July through early November. Many major retailers, anticipating a strike, began shipping their merchandise to U.S. distribution centers in June, and Gould noted that the majority of products are already in the U.S.
But retailers will have difficulty replenishing items and will incur additional warehouse costs to store goods longer. Gould also noted that carriers are already announcing container surcharges to address potential disruptions.
The Gaming Association, the nation’s leading gaming trade group, was one of nearly 200 trade groups that sent a joint letter to President Biden earlier this month urging the administration to work with the ILA and USMX to reach a contract. Greg Ahern, its president and CEO, noted that the strike would occur at a very critical time for toy vendors and makers — up to 60% of the toy company’s annual sales come during the fourth quarter.
The toy industry’s holiday shipping period is six to eight weeks and began in July, he said, though some toy companies have tried to ship earlier or add more toys to shipments.
“It hits in so many ways,” he said. “From a consumer perspective, it starts with a delay in availability and then it starts to manifest itself as a shortage of in-game products. In the retail trade of the gaming industry, this leads to higher prices based on scarcity and increased costs.
AP writers Tom Krischer in Detroit and Stephen Groves in Dover, Delaware, contributed to this report.
