The dock workers strike on the East and Gulf Coasts of the United States could generate significant economic losses, affecting a wide range of business sectors. According to estimates, the cost to the US economy could reach 5 billion dollars daily if the strike continues, directly affecting industries that depend on workers. ports for the import of essential products such as food, clothing and automobiles, according to an analysis by JP Morgan.
In the long term, this strike could aggravate inflationary problems existing in sectors such as food and housing, which would add to consumer frustration. Estimates indicate that each day of strike can cause weeks of delay in the recovery of the normal flow of goods
This financial impact is due to disruption at 14 key ports that handle approximately half of the country’s maritime imports. The paralysis of trade in these ports would especially affect the automotive, pharmaceutical and food industries. For example, the port of Baltimorewhich leads in vehicle imports, would see shipments valued at $37.8 billion a year disrupted. Likewise, shipments of agricultural and pharmaceutical products that depend on these ports are also at risk.
USA TODAY warns that the strike could cost up to 5 billion dollars a day, affecting both small and medium-sized businesses and potentially increasing prices for consumers already affected by inflation.
“Any strike that lasts more than a week could cause a shortage of goods for the holidays,” Eric Clark, portfolio manager at Accuvest Global Advisors, warned USA Today.
The dockworkers’ strike, which spans from Maine until Texasis beginning to tangibly affect consumers, especially in the prices of essential products. Although most Christmas goods have already been imported, a prolonged strike could lead to shortages and price increases on key products such as fresh fruits, vegetables, cars y electronic products.
While large retailers anticipated the disruption and adjusted their inventories, perishable fruits such as bananas, avocados and pineapples, which are primarily imported through the East Coast, could see price increases due to high logistics costs. Some supermarkets have warned that banana prices could double temporarily, as retailers are forced to look to expensive alternatives such as air freight to ensure supply.
Additionally, if the strike is prolonged, consumers could face shortages of electronics, clothing and toys. The US Toy Association warned that until 60% of annual toy sales is made in the last quarter, which means that any delay in the supply of these products could lead to higher prices and less availability in stores. Likewise, the additional costs of ground transportation to redirect shipments increase prices on basic products.
Faced with the disruption caused by the strike, many companies have begun to take preventive measures to mitigate its effects. Large retailers such as Walmart, Amazon y Home Depotwhich have containers stranded in closed ports, have attempted to secure their inventories by moving shipments to the west coast. However, this change has generated additional costs, with some companies facing increases in the 10% al 20% in their logistics expenses due to the need to use land transportation and redirect merchandise.
Despite these efforts, the increase in transportation costs has been inevitable for many companies, which invest in 300 to 2,000 dollars per container in the redirection of shipments.
The ports that have been most affected include some of the most active in the import and export of strategic goods for the US economy. Among the most affected ports are:
- New York/New Jersey: The largest port on the East Coast, essential for the transportation of retail products and heavy machinery.
- Baltimore y Brunswick, Georgia: The country’s two main automobile import ports, crucial to the American auto industry.
- Philadelphia: Port that prioritizes the import of fruits and vegetables, mainly from Latin America.
- New Orleans: Important for the entry of agricultural products such as coffee and cocoa from South America, as well as chemicals and wood.
Other key ports include Boston, Norfolk, Charleston, Savannah, Tampa y Mobileall of them affected by the strike, which has caused considerable interruptions in the logistics of these entry points.
The products that will be most affected by this strike include everything from perishable foods to automobiles and electronic products. East and Gulf Coast ports handle a large portion of imports of:
- Fresh fruits and vegetables: The port of Philadelphia It is a key entry point for fresh produce from South America, including tropical fruits such as pineapples and bananas, products that could face significant delays in arriving on American supermarket shelves. One distribution executive even mentioned that banana prices could double due to additional logistics costs.
- Automobiles and parts: Ports Baltimore y Brunswick They are critical to the automotive trade, and disruption at these facilities could lead to shortages of vehicles and parts. Car imports from Europe, in particular, would be affected, as redirecting these shipments is more complicated than those from Asia.
- pharmaceutical products: More than 69% of pharmaceutical exports in containers and 91% of imports of these products in the US are handled by the ports affected by the strike. This includes critical medications such as anesthetics and essential medical supplies such as latex gloves, which could face delays if the shutdown is prolonged.
Other key ports include Boston, Norfolk, Charleston, Savannah, Tampa, Mobile and Houston, all of which were affected by the strike, which has caused considerable disruption to logistics at these entry points.
The strike is also affecting the mass consumption products such as clothing, toys and furniturewhich could influence the prices of these goods during the Christmas shopping season.
It is anticipated that a one-week stoppage could create a backlog that would take up to 84 days to resolve, according to CNBC. Companies are dealing with additional costs associated with diverting cargo to other ports, as well as using additional ground transportation, which increases rates and will affect consumers with increases in final prices.
The International Longshoremen’s Association (ILA) and the US Maritime Alliance (USMX), which represents port operators, have reached an impasse in negotiations. The ILA calls for a 77% pay increase over six years, arguing that it is needed to offset inflation and years of smaller pay increases. Additionally, the union is calling for a complete ban on the automation of cranes, doors and cargo trucks, arguing that this technology puts the job security of thousands of port workers at risk.
In response, the USMX offered a 50% salary increase in six yearsalong with a tripling of contributions to retirement plans and improvements in health coverage. He also promised to maintain the limits on automation already included in the previous contract. Despite this offer, the union rejected the proposal, highlighting that it does not fully satisfy their demands, so the strike continues.
Meanwhile, the U.S. government, which could intervene under the Taft-Hartley Act if the strike is deemed a threat to the economy, has decided not to get involved. President Joe Biden has made clear that he believes in collective bargaining and does not plan to use his powers to temporarily suspend the strike, as he previously did in port negotiations on the West Coast.