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The port strike could trigger a US recession if it lasts four weeks or more, says Alan Murphy of Sea-Intelligence.
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The researcher estimated that the strike will cost the US $3 billion to $5 billion per day.
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Shipping costs and delays could escalate, impacting global trade if the strike continues.
The economy could see a hard landing if the ongoing strike at ports lasts long enough, according to an industry researcher.
Alan Murphy, the CEO of liner shipping research firm Sea-Intelligence, estimates that the US could enter a recession if the port strike lasts more than a month. That’s because of the rising costs of the strike, which is estimated to cost the economy billions of dollars a day, he said in a recent interview with NBC, citing forecasts from other experts.
“Various estimates from different economists put it somewhere between $3 billion and $5 billion per day,” Murphy said, pointing to delayed shipments and potentially higher freight costs.
It is unclear how long the strike will last. The Biden administration could potentially put longshoremen back to work by using a 1947 law that allows the president to intervene in critical labor disputes.
If the strike lasts more than a week, importers will likely face a “manageable crisis,” Murphy said.
Within two weeks, that crisis could escalate into a “major challenge” as ships could return to their starting destinations, raising freight costs.
By the third week, global shipping costs are likely to increase, he estimates.
“According to estimates, the US is almost certain to enter a recession this year if it lasts longer than a month,” he added.
Port workers on the East and Gulf Coasts began striking Tuesday morning after the International Longshoremen’s Association and the US Maritime Alliance failed to reach an agreement before the workers’ union contract expired.
Analysts have warned that the work stoppage could impact supply chains for months, with one economist estimating that the impact of a two-week strike could stretch into 2025.
Read the original article on Business Insider
