A strike by dockworkers at dozens of U.S. Ports has paralyzed about half of the country’s ocean shipping, and a prolonged dispute could bring the issue close to home for consumers.
The strike, which includes about 45,000 members of the International Longshoremen’s Association (ILA), shut down 14 ports across the country—with hubs in New Jersey, Virginia, and Texas among them. The suspension of cargo shipping on the East and Gulf coasts could hit the U.S. Economy to the tune of $4.5 billion per day, JPMorgan estimated.
While a short strike of just a few days may have little effect on the supply of goods to the U.S., the risks increase as time goes on. Some retailers likely pushed up their inventory shipments in anticipation of a labor dispute, which could hold off the effects for now, Bank of America analysts wrote in a Tuesday note.
“Each day that this goes on, it creates a backlog of containers and ships,” American Farm Bureau Federation economist Daniel Munch told CBS MoneyWatch. “A three- to five-day strike will take two weeks to clear. If it goes into three-week territory, it will be early January before it gets cleared.”
The shutdowns could immediately affect the supply of perishable foods, including 75% of the country’s banana imports, which are received at ILA-handled ports, according to the American Farm Bureau Federation. More than half the supply of coffee and tea, beverages and spirits, and medical equipment could also be affected, according to the National Association of Manufacturers.
Exports of fertilizer, vehicles, and commodities such as wood pulp are also affected by the strike. The labor dispute could hit some companies’ bottom lines as exports are crippled, including Tyson Foods and Pilgrim’s Pride, which could struggle to export processed chicken out of the southeast, BofA analysts wrote.
In their first strike since 1977, ILA dockworkers have been pushing for a 77% pay raise over the life of the contract and a halt on automation that could replace union jobs at U.S. Ports. In a statement, the ILA wrote that it would strike as long as needed to secure protections for its members.
“We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve,” the statement read.
Meanwhile, the United States Maritime Alliance (USMX) which represents the dockworkers’ employers, said in a statement to Coins2Day that the strike was “completely avoidable.”
“Our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy running,” the USMX wrote in a statement.
Bank of America analysts estimated in the Tuesday note that the strike would last no longer than a few days or weeks before President Joe Biden uses his powers under the Taft-Hartley Act to break up the strike and establish an 80-day cooling off period.
While Biden said Monday he would not invoke the Taft-Hartley Act because he didn’t “believe in it,” BofA analysts said eventually he will be pressured to act.
“We see Biden needing to balance the need to appear pro-labor and supporting the workers in their negotiations, but also the need to keep an eye on supply chains and [the] economy, which could be disrupted by prolonged port strikes,” the analysts wrote.