Updated October 1, 2024 4:oo pm:
Acting Secretary of Labor Julie Su issuedthe following statement on the on negotiations between USMX and the International Longshoremen’s Association:
“Over the last week and more, I have spent hours on the phone and in meetings with the parties urging them to find a way to reach a fair contract. This country’s port workers put their health and safety on the line to keep working through the pandemic so we could get the goods we needed as COVID raged and these workers will help communities recover from the devastating effects of Hurricane Helene. As these companies make billions and their CEOs bring in millions of dollars in compensation per year, they have refused to put an offer on the table that reflects workers’ sacrifice and contributions to their employer’s profits.”
“The American economy has defied all expectations thanks to the Biden-Harris administration’s leadership. There is room for both companies and their workers to prosper. The parties need to get back to the negotiating table, and that must begin with these giant shipping magnates acknowledging that if they can make record profits, their workers should share in that economic success.”
Update, Oct. 1 3:00 pm:
Fox News reported the following:
The National Association of Manufacturers (NAM), the U.S. Chamber of Commerce, the National Retail Federation (NRF) and National Association of Wholesale-Distributors (NAW) released statements calling on Biden to invoke a federal labor law known as the Taft-Hartley Act that would restore operations at ports during an 80-day cooling off period while negotiations continue.
"Manufacturers call on President Biden to intervene by invoking the Taft-Hartley Act, which will force ports to resume operations while negotiations continue," NAM CEO Jay Timmons said in a statement. "There will be dire economic consequences on the manufacturing supply chain if a strike occurs for even a brief period."
Original article, Oct. 1, 2024 :
Below is a collection of comments and analysis on the effect of the Longshoremen strike.
Statement from Alliance for Chemical Distribution CEO Eric R. Byer
“ACD is extremely disappointed that the ILA and USMX failed to ratify a labor contract agreement. For months, there has been an unwillingness to formally negotiate in good faith, with both sides allowing a strike to occur despite having months to negotiate and reach an agreement. The ocean shipping market is already in disarray and this strike will result in severe delays, reroutes, and greater uncertainties on the delivery of essential products at countless U.S. ports. ACD urges the Biden Administration to swiftly intervene to resolve this strike by reopening the ports and getting both sides to reach an agreement, to prevent further supply chain disruptions and avoid significant economic consequences.”
Statement from National Association of Wholesaler-Distributors CEO Eric Hoplin
“The East and Gulf Coast port strike is putting our economy and national security at risk. This strike isn’t just about disrupting a few shipments; it’s about stopping the supply chain and bringing the flow of critical goods to a standstill.
The damage could reach $5 billion a day, with small and mid-sized businesses at risk due to missed deliveries and empty shelves. The Biden administration must use its authority now to stop the strike before the impact becomes irreversible. This is not just about pay or a shipping delays—it’s about our global competitiveness. The ILA’s demands to ban automation in ports will cripple our ability to compete internationally, while ports in Europe and Asia embrace automation and technology to stay ahead.
The administration must act decisively—end this strike, reopen the ports, and ensure the U.S. remains a leader in global trade.”
Statement from Transportation Intermediaries Association CEO Anne Reinke:
"With the longshoremen’s strike now in effect, the disruption to our supply chain is both immediate and far-reaching, impacting industries from retail to manufacturing at a crucial time—just as the holiday season begins. As industry experts have noted, for every day of the strike, it will take five to seven days to recover. Essential goods are at risk of delays and price increases, which will severely affect consumers nationwide. With 43% of U.S. imports moving through these ports, the economic consequences will deepen the longer the strike continues.
We strongly urge both the ILA and United States Maritime Alliance (USMX) to resolve their differences at the bargaining table. Additionally, we call on President Biden to intervene and facilitate a resolution to protect the stability of the U.S. economy and supply chain. The integrity of our supply chain is at stake, and further delays will only worsen the impact on businesses and consumers alike."
Economic Impact
Statement from ITR Economics economist Lauren Saidel-Baker
"The US dockworker strike across the Gulf and East coasts could snarl supply chains, setting up a scenario reminiscent of the pandemic-era logistics crisis. While shortages and delays are possible, the greatest economic impact will be in pricing, with greater inflationary impacts more likely the longer the strike persists.
Overall inflation has been declining in recent months but with underlying differences between goods inflation and services inflation. Goods costs have been well-controlled, with relatively stable commodity prices and, at least until recently, lower shipping costs. On the service side, labor market tightness has driven higher wages, resulting in more persistent rates of inflation.
The port strike could cause renewed goods-side inflation, although the impact would not be immediate. Many businesses still contend with elevated inventories in the aftermath of pandemic-era disruptions and bounce-back, which will likely create a cushion in the near term.
At ITR Economics, we expect disinflation to persist for the remainder of 2024 but a resurgence in inflation in 2025 and beyond, with the CPI trending in the high-2% to low-4% range in 2025-2026. The strike could be an upside risk to pricing in addition to the inflation already written into economic fundamentals.
The American consumer appears weary of inflation, making the potential pricing impacts a key bargaining chip during union negotiations.
While recent memory of one supply chain disruption makes this strike less palatable for the American consumer, the very fact of that event has prepared many businesses for a recurrence. The 2020 disruption presented unforeseen challenges but encouraged many firms to diversify their supply chain and seek backup sourcing: preparation that will likely soften the blow of the dockworker strike.
Analysis from Project 44
Expected Impact on Ports
The impact of a strike of this scale to ports will be immediate and widespread. When labor ceases, freight currently at the port will be stuck and vessels scheduled to enter or exit the port will be impacted, causing ripple effects to vessel schedules globally. Vessels will likely have to anchor near ports as they wait, and import and export dwell will skyrocket. There are currently over 100 container vessels scheduled to reach these ports within the next week.
In 2023, the labor union on the West Coast staged a one day no show. After that one day, ports took three weeks to return to normal and work through the backlog of containers, and we saw as much as a 148% increase to dwell times.
Impacts to this strike will be longer lasting and more severe than the one-day strike back in 2023, particularly due to the timing. Peak season means that more freight is inbound, and the containers will continue to pile up until a new contract is enacted.
Impacted Industries
No industry is immune to the impacts of this strike, but there are some industries that rely more heavily on the East and Gulf Coasts than others.
Energy and Petrochemicals:
Gulf Coast ports, especially Houston and New Orleans, handle 60-70% of the U.S. exports of crude oil, refined petroleum products, and natural gas.
A significant portion of the petrochemical supply chain, including plastics and chemical feedstocks, also moves through these ports.
Agriculture:
About 60% of U.S. grain and soybean exports flow through Gulf Coast ports, with New Orleans being a major hub for agriculture exports from the Midwest.
Heavy Manufacturing & Machinery:
Gulf Coast ports handle around 25-30% of U.S. exports of industrial machinery and heavy equipment, much of it bound for Latin America and Europe.
Retail and Consumer Goods:
East Coast ports manage 35-40% of U.S. consumer goods imports such as electronics, clothing, and furniture. Ports like New York/New Jersey and Savannah are critical for trade with Europe and Asia.
Many of these imports are destined for the East Coast and Midwest retail markets.
Automotive Industry:
Approximately 30-35% of U.S. automotive imports and exports pass through East Coast ports, especially vehicles and parts from Europe. The Port of Baltimore is a key hub for RoRo (Roll-on/Roll-off) vessels. When the port temporarily halted operations, the industry remained stable by rerouting shipments to nearby ports. However, if a strike occurs in October, disruptions to manufacturing will likely be unavoidable.
Pharmaceuticals and Chemicals:
Approximately 30-35% of U.S. pharmaceutical imports flow through East Coast ports. This includes active pharmaceutical ingredients (APIs) and finished drugs from Europe, India, and other regions.
Food and Beverages:
East Coast ports manage 30-40% of U.S. food and beverage imports, including perishables like produce, seafood, and processed foods from Europe and Africa.
Construction Materials:
Combined, the East and Gulf Coast ports handle about 25-30% of U.S. imports of steel, cement, and other construction materials, primarily sourced from Europe and Latin America.
Impacts to Peak Season
The timing of the strike is critical, as it occurs during the ocean peak season (August through October), when retailers are importing goods for the upcoming holiday shopping period. Since East Coast ports handle 35-40% of U.S. consumer goods imports, and it is too late for companies to divert peak season volumes to the West Coast, this strike is likely to have significant impact on retailers' ability to stock inventory in time for the holidays depending on how long it lasts.
There is also a heavy seasonal component to a lot of imports. Goods such as holiday decorations are only in demand prior to the holidays. If these goods are stuck at ports during the period that they would normally sell, retailers will have to either sell at heavy discounts when they arrive, try to work out returns to vendors, or store the goods for a year until they are seasonally relevant again. All of these options cut into the profit margins of retailers and could result in higher prices for consumers.
Some retailers may turn to air freight as an alternative, this market is both constrained and substantially more expensive, making it an impractical solution for large-scale imports.
Truckload, Rail, and Air Impacts
While the strike is only taking place at ports, this will have ripple effects for other modes of transportation. Shippers may opt to bring freight into the West Coast rather than East Coast, which will increase demand for rail and truckload transportation for freight to cross the country. This will likely cause increases in rates, as well as congestion and higher transit times for freight, as well as difficulty securing capacity.
Air freight is another option for shippers. This reduces transit time, which may be critical given the quickly approaching holiday season, but that comes at a cost. Air freight is the most expensive mode of transportation and also is able to carry the least capacity. There is heavy competition for space on planes as well, particularly out of China with companies like Temu and Shein leveraging much of the capacity.
