What to expect and what impact this could have on the economy

What are the issues of the dock 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 ILA and the United States Maritime Alliance, which represents the ports, expired on Tuesday. Some progress was reported in talks late Monday night, but the union still went on strike.

The union’s opening offer called for a 77% pay increase over the six-year term of the contract, with President Harold Daggett saying it was necessary to offset inflation and years of small raises. ILA members earn a base salary of about $81,000 per year, but some can earn over $200,000 per year with large overtime hours.

On Monday evening, Allianz announced that it had increased its offer to 50% over six years and promised to maintain the automation limits from the old contract. Allianz also said its offer tripled employer retirement contributions and strengthened health care options.

Which ports are affected?

While every port can handle any type of goods, some ports specialize in handling goods for a specific industry. Ports affected by the closure include Baltimore and Brunswick, Georgia, the two busiest motor 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 the U.S. economic health, President Joe Biden could seek a court order for an 80-day cooling-off period under the Taft-Hartley Act of 1947. This would suspend the strike.

But Biden said “no” during an exchange with reporters on Sunday when asked if he planned to intervene to plan for a possible work stoppage that would impact East Coast ports.

“Because this is collective bargaining, I don’t believe in Taft-Hartley,” Biden said.

What impact will this have on consumers?

The strike could last weeks or months. If the strike is resolved within a few weeks, consumers probably wouldn’t notice 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 contingency 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 back rooms to ensure we have essential items in stock,” Haase said.

Daniel Vasquez, owner of Dynamic Auto Movers in Miami, 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 shipments when the strike hits hard,” Vasquez said.

How will 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 strike comes at a time when the delivery network continues to face challenges from Houthi attacks on commercial shipping, disrupting operations in the would have essentially brought the Red Sea and the Suez Canal to a standstill.

The supply chain uncertainty comes at the height of the holiday shipping season for retailers, 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 said the majority of products ordered were already in the U.S

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, Ahearn 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.”

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AP writers Tom Krisher in Detroit and Stephen Groves in Dover, Delaware, contributed to this report.