A massive longshoremen’s strike could close Gulf Coast ports: What you should know

U.S. ports from Maine to Texas could be closed Tuesday if a union representing about 45,000 longshoremen stages a threatened strike.

A prolonged shutdown could drive up prices for goods across the country, potentially leading to shortages and price increases at retailers large and small as the holiday shopping season — along with a close presidential election — approaches.

“First and foremost, we can expect delays in market launch. And those delays really depend on what the goods are, what the priorities are at the ports and how quickly things are moving,” said Mark Baxa, president of the Council of Supply Chain Management Professionals.

WHAT ARE THE ISSUES OF THE HAUNTING WORKERS’ STRIKE?

The International Longshoremen’s Association is calling for significantly higher wages and an outright ban on the automation of cranes, gates and container trucks used to load and unload cargo at 36 U.S. ports. About half of the country’s cargo is handled by ship in these ports.

The contract between the International Longshoremen’s Association and the United States Maritime Alliance, which represents the ports, expires Tuesday. The two sides have not held negotiations since June. A strike by ILA workers would be the union’s first since 1977.

WHICH PORTS ARE AFFECTED?

While every port can handle any type of goods, some ports specialize in handling goods for a specific industry. Ports that would be affected by the closure include Baltimore and Brunswick, Georgia, the two busiest car ports; Philadelphia, where fruits and vegetables are a priority; and New Orleans, which processes coffee, primarily 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, Va.; Wilmington, North Carolina; Charleston, South Carolina; Savannah, Georgia; Tampa, Fla.; Mobile, Alabama; and Houston.

Can the government intervene?

If a strike were deemed a threat to U.S. economic health, President Joe Biden could seek a court order for an 80-day cooling-off period under the Taft-Hartley Act. This would suspend the strike.

Brian Ossenbeck, an analyst at JPMorgan, said he believes Biden could take that route, even though the administration currently says it has no plans to do so.

“We believe the economic impact of a disruption would be too great to ignore for more than a week, as the economy and inflation are key issues in the closely contested election,” he wrote in a note to clients.

What impact does this have on consumers?

The strike could last weeks or months. If a strike were resolved within a few weeks, consumers would likely not experience major shortages of retail goods. But a strike lasting more than a month would likely lead to shortages of some consumer goods, even though most Christmas items have already arrived from abroad. Shoppers could see higher prices on a variety of goods, from fruits and vegetables to cars.

RETAILERS CREATE EMERGENCY PLANS

Since 2021’s major supply chain disruption caused by pandemic-related shortages, retailers have adjusted to supply chain disruptions being “the new norm,” said Rick Haase, owner of a mini-chain of Patina gift shops in and around the Twin Cities Minnesota.

“The best approach for Patina has been to secure orders early and have inventory ready in our warehouse and backrooms to ensure we have essential items in stock,” he said.

Daniel Vasquez, owner of Dynamic Auto Movers in Miami, Florida, which specializes in importing and exporting vehicles, increased inventory in anticipation of a strike, particularly for vehicles that take longer to ship.

It also no longer relies on a single port or shipping partner and has expanded its relationships with smaller ports and shipping companies that can bypass congested areas.

“This move gives us an advantage: having backup partners allows us to efficiently redirect deliveries when the strike hits hard,” he said.

How does a strike affect Christmas shopping?

Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, the country’s largest retail group, said the possible strike comes as the delivery network continues to face challenges from ongoing Houthi attacks on commercial shipping, which have come to a virtual standstill the use of the Red Sea and the Suez Canal.

The uncertainty also comes during the peak of retailers’ holiday shipping season, which traditionally runs from July to early November. Many major retailers, anticipating a strike, began shipping their goods to U.S. distribution centers in June, and Gold noted that much of the product is already in the United States

However, retailers will find it difficult to restock items and incur additional storage costs to store goods for longer. Gold also noted that shipping companies are already announcing surcharges on containers to address potential disruptions.

The Toy Association, the nation’s leading toy trade group, was one of about 200 trade groups that sent a joint letter to President Biden earlier this month calling on the administration to work with ILA and USMX to develop a contract. Greg Ahearn, president and CEO, noted that a strike would come at a highly critical time for toy sellers and manufacturers – up to 60% of a toy company’s annual sales occur in the fourth quarter. The holiday shipping window for the toy industry is between six and eight weeks and began in July, although some toy companies tried to ship earlier or include more toys in shipments, he said.

“It hits many aspects,” he said. “From a consumer perspective, it starts with delays in availability and then shows up in toy product shortages. In retail for the toy industry, this leads to potentially higher prices due to shortages and increased costs.”