NEW YORK (AP) — U.S. ports from Maine to Texas closed this week as the union representing about 45,000 longshoremen went on strike for the first time since 1977.
Workers began walking picket lines near ports along the East and Gulf coasts early Tuesday.
A shutdown that lasts more than a few weeks has the potential to raise prices and create shortages of goods across the country during the holiday shopping season — along with a close presidential election — approaches.
President Joe Biden told reporters on Thursday that he believed progress was being made in ending the strike. When asked how much, Biden said: “We’ll find out soon.”
What are the problems with the dock workers’ strike?
The International Longshoremen’s Association is demanding significantly higher wages and a total ban on the automation of cranes, gates and container-moving trucks used to load or unload cargo at 36 U.S. ports. These ports handle about half of the nation’s cargo from ships.
The contract between the ILA and the United States Maritime Alliance, which represents the ports, expired on Tuesday.
The union’s opening demand was a 77% wage increase over the six-year term of the contract, with president Harold Daggett saying this would offset inflation and years of small wage increases. ILA members earn a base salary of about $81,000 per year, but some can earn more than $200,000 annually with large amounts of overtime.
On Monday, before workers began hitting the picket lines, the alliance said it had increased its offer to a 50% increase over six years and pledged to maintain restrictions on automation under the old contract. The alliance also said its offering tripled employer contributions to retirement plans and strengthened health care options.
Which ports are affected?
Although any port can handle any type of goods, some ports specialize in handling goods for a particular sector. The ports affected by the closure include Baltimore and Brunswick, Georgia, the two largest car ports; Philadelphia, which prioritizes fruits and vegetables; and New Orleans, which processes coffee primarily from South America and Southeast Asia, various chemicals from Mexico and Northern Europe, and wood products 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, FL; Mobile, Alabama; and Houston.
Can the government intervene?
If a strike were deemed a danger to American economic health, President Joe Biden could seek a court order for an 80-day cooling-off period under the 1947 Taft-Hartley Act. This would suspend the strike.
But speaking to reporters Sunday, Biden said “no” when asked whether he planned to intervene.
“Because it’s collective bargaining, I don’t believe in Taft-Hartley,” Biden said.
What consequences will this have for consumers?
If the strike is resolved within a few weeks, consumers are unlikely to notice any significant shortages or price increases. But a work stoppage that lasts longer than a month can be a different story depending on what you’re shopping for. Most of the holiday retail items have already arrived from overseas, so there is a buffer. Prices for everything from fruit and vegetables to cars could rise, at least temporarily, if this continues.
That would be unwelcome news after constricted supply chains sent prices soaring late in the pandemic, and potentially politically damaging with Election Day just around a month away.
The sell-by clock never stops ticking
Container loads of highly perishable bananas are stuck at some ports and Agriculture Secretary Tom Vilsack told reporters Thursday that it will be difficult to get them back because of the strike. Biden has especially urged shipping companies to try harder to resolve the dispute, he said.
“That is the most effective way to get the bananas where they need to go. And hopefully the shippers will come to the table,” Vilsack said. “The union will come to the table. Collective bargaining will work, and we will resolve this quickly.”
Limiting the duration of this strike is key to preventing shortages and higher prices, Vilsack said.
“Our assessment is that if this continues for a few weeks, we would not call it a significant disruption,” he said. “If you get months, then that is of course a different situation.”
Companies make contingency plans
Since the major supply chain disruption of 2021, retailers have adapted to the fact that supply chain disruptions are the new normal, says Rick Haase, owner of a mini-chain of Patina gift shops in and around Minnesota’s Twin Cities.
“The best approach for Patina was to secure orders early and have the goods in our warehouse and backrooms to ensure we have the most important goods in stock,” Haase said.
Still, housing these goods for longer could have an inflationary impact on the cash register, as retailers will have to recoup or absorb these storage costs.
Jay Foreman, CEO of Basic Fun, a Boca Raton, Fla., maker of Care Bears and Lincoln Logs, has already moved all of the toy company’s container shipments from the East Coast to West Coast ports, mainly Los Angeles and Long Beach. That also entails costs.
The maneuver added somewhere between 10% and 20% extra costs that his company will have to absorb because Basic Fun’s prices are locked in at retailers for the next ten months. But Foreman is said to be considering raising prices in the second half of 2025 if the strike is extended.
Daniel Vasquez, owner of import-export specialty company Dynamic Auto Movers in Miami, increased inventory, especially for vehicles that take longer to ship, in anticipation of a strike.
He too is no longer dependent on one port or shipping partner and has expanded his relationship with smaller ports and shipping companies that can bypass congested ports. areas.
How will a strike affect holiday 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 supply network is already facing challenges from Houthi attacks on commercial shipping that essentially the use of the Red Sea and the Suez Canal.
The increasing supply chain uncertainty comes at the height of the holiday season for retailers, which traditionally runs from July to early November. Many major retailers began shipping goods to U.S. distribution centers in June in anticipation of a strike, and Gold said the majority of these products are already in the U.S.
But on top of the costs of storing goods longer, retailers will struggle to replenish inventory if the strike continues, and as Gold noted, carriers are already announcing surcharges on containers shipped due to potential disruptions.
Toy companies had already diverted many shipments through Los Angeles in anticipation of a strike, and store inventories are now healthy, said Greg Ahearn, who heads The Toy Association, the nation’s largest toy trade group. He said Wednesday that the strike is becoming more problematic over time, especially when it comes to meeting demand for popular toys as Christmas approaches.
As much as 60% of toy companies’ annual sales occur during the current quarter, Ahearn said.
“The longer this goes on, the more likely that toys that parents and caregivers want for their children will be scarce, and with scarcity comes the potential for higher prices,” he said.
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AP writers Tom Krisher, Stephen Groves and Colleen Long contributed to this report.
