Thousands of Atlantic and Gulf Coast port workers went on strike at 12:01 a.m. on Oct. 1 for the first time since 1977, a work disruption that could potentially cause sizable harm to the U.S. economy.
The International Longshoremen’s Association (ILA), North America’s largest union of dock and maritime workers with 85,000 members, rejected a proposal made by the U.S. Maritime Alliance (USMX), which is a coalition of container carriers, direct employers, and port associations.
“We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve,” said Harold Daggett, the ILA president.
Before the strike began, USMX officials had offered a near 50 percent wage increase, better health care and retirement benefits, and improved automation and semi-automation protections over a proposed six-year contract.
Work stoppages, which will disrupt billions of dollars in daily trade flows, have rekindled pandemic-era fears of product shortages and inflationary pressures.
When reporters asked Daggett if he was concerned that the strike would harm everyday Americans, he stated that the public never cared about the port workers “until now when they finally realized the chain is being broken.”
“You know how many people depend on our jobs? Half the world,” he said.
Economic Implications of the Port Strike
According to an analysis by economists at The Conference Board published on Sept. 27, a one-week strike could cost the U.S. economy $3.78 billion, or $540 million per day.The East and Gulf Coast ports handle approximately half of all U.S. container volume and manage about one-quarter of the $3 trillion in U.S. annual international trade.
“A port strike would paralyze U.S. trade and raise prices at a time when consumers and businesses are starting to feel relief from inflation,” said Erin McLaughlin, a senior economist at The Conference Board. “There’s no easy Plan B. While shippers have already begun diverting some cargo to the West Coast, capacity for such alternative options is limited.”
Eric Clark, the portfolio manager at Accuvest Global Advisors, says that tens of thousands of workers walking off the job “has the possibility of being a very bad outcome” for the U.S. economy.
He estimates that any disruption lasting more than one week could cause goods shortages for the holiday season. Retailers would be unable to raise prices without products, “so lost sales could be the result,” he said.
“There’s nothing business owners can do to mitigate what could be coming if the strike lasts more than a week-ish,” he said in a note emailed to The Epoch Times. “The issue is, most companies have drawn down inventories and are running pretty lean, so any lingering delays with shipping could have them running low at a pivotal holiday period.”
The global supply chain, recovering from the global shutdown during the COVID-19 pandemic, has already endured several challenges this year, such as the Baltimore bridge collapse, the conflict in the Red Sea, and the drought impacting the Panama Canal.
Christina DePasquale, an associate professor of economics at Johns Hopkins Carey Business School, says the port strike will affect various items.
“The most immediate impact is going to be the halted flow of goods through the East Coast,” DePasquale told The Epoch Times. “That'll directly impact any industries relying on imports, exports, retail, manufacturing, agriculture.”
Indeed, the strike will halt the flow of a wide range of products, such as alcohol, automobiles, clothing, food, and household goods. Imports of parts required to keep U.S. factories running and workers at these facilities would also be stopped.
For instance, the group noted that about 3.8 million metric tons of bananas arrived at ILA-managed ports, “supplying over 75 percent of the nation’s bananas.”
“Beyond bananas, delays and shortages would occur for a wide array of everyday items,” it said, including cherries, canned food, chocolate, and hot peppers.
DePasquale notes that businesses and consumers will be impacted differently in the near term. Companies that depend on imports to replenish their inventories would instantly feel shipment delays, while consumers will be largely unscathed at first unless the strike drags on.
“Right now, I would say to not panic,” she said. “If we’re looking at November 15, Thanksgiving, and this is still going on, then you actually might see some effects there.”
Companies started accelerating their imports before the busy holiday shopping season. This past summer, retailers were rushing to execute Christmas orders in response to rising shipping costs and trade route disruptions. Others were preparing for a potential work stoppage weeks in advance.
However, according to Robert Khachatryan, founder and CEO of Freight Right Global Logistics, even a temporary shutdown could initiate “significant delays in goods reaching consumers.”
“The strike’s timing is particularly concerning as it coincides with the holiday season, which accounts for about 20 percent of annual U.S. retail sales revenue,” Khachatryan told The Epoch Times. “Retailers have already begun adjusting their shipping schedules to mitigate potential disruptions, but delays in inventory could lead to empty shelves during peak shopping periods.”
Ahead of the port strike, some companies had started diverting shipments to West Coast ports unaffected by the strike. The challenge, says Khachatryan, is capacity limitations at these locations that could not fully offset the potential losses from the East Coast operations.
“This shift could temporarily benefit West Coast ports by increasing their freight volumes, but it may also lead to congestion and increased shipping rates due to heightened demand,” he said.
Stamatis Tsantanis, chairman and CEO of Seanergy Maritime and United Maritime, predicts that a two-week strike would mean port operations would not normalize until the beginning of 2025 as the backlog takes time to clear up.
“The impact of a strike now is going to be way more impactful for Christmas and not next week or the week after that,” said Tsantanis in an email to The Epoch Times. “Those ships will take longer to make their rounds and come back, and that creates a backlog.”
Peter Sand, the chief analyst at Xeneta ocean freight rate intelligence platform, said that ocean carriers carrying billions of dollars of cargo could not turn back or re-route to the U.S. West Coast.
While some might divert to Canada or the eastern region of Mexico, the “vast majority will simply wait outside affected ports until the workers return.”
“A strike lasting just one week will impact schedules for ships leaving the Far East on voyages to the U.S. in late December and throughout January.”
