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Businesses are bracing for a strike at three dozen US ports that could upend supply chains and raise prices just weeks before election day.
The International Longshoremen’s Association says its 25,000 members will walk off the job if the union does not come to a new agreement with the US Maritime Alliance, which represents carriers and marine terminal operators, before their contract expires on September 30.
The contract covers all ports between Maine and Texas, including New York, Savannah, Houston, Miami and New Orleans.
They receive 41 per cent of the country’s port volume and their closure would have a “devastating impact” on the US economy, a coalition of 177 trade groups warned last week.
Business leaders say they have been tracking the labour negotiations since 2021, but became nervous when talks broke down in June over automation at the Port of Mobile.
Official negotiations never resumed. Executives and economists assumed Washington would intercede as it did to prevent a freight rail strike in 2022, but President Joe Biden said last week he would not prevent labour action at the ports.
The statement dramatically “rose the level of alarm”, said Moody’s Analytics economist Adam Kamins.
“The writing is on the wall here,” said Tom Madrecki, vice-president of the Consumer Brands Association. “There’s a lot of sabre-rattling. We all don’t want to strike, but I think we have to be prepared that there could be one . . . and it’s going to have a really serious impact on the economy.”
Business groups fear that such a major disruption to supply chains would dramatically raise the cost of importing materials, exporting products and warehousing shipments, which would raise consumer prices.
Businesses have already adopted costly mitigation plans as they face rising shipping costs and increased timelines from Houthi attacks in the Red Sea.
Though some California ports suffered labour disruptions last year, the last major work stoppage was an 11-day lockout at west coast ports in 2002. That closure cost $1bn each day and caused six months of backlogs.
Trade groups representing retailers, restaurants, manufacturers, food producers and fashion designers are urging Biden to reverse his position.
Madrecki said that CBA has been in contact with the Biden administration on the issue for more than a year but fears that the November 5 presidential election has “coloured the politics” of the labour dispute.
Labour unions are a crucial part of Vice-President Kamala Harris’s voting bloc and ILA leadership has repeatedly said that they would not welcome government interference in the labour dispute.
“This administration has prided itself on all the work they’ve done on supply chain resiliency. Well, this is an issue that is right in front of us that can be averted,” said the National Retail Federation’s Jonathan Gold, who has also spoken with administration officials about the impending strike.
“A sleeping giant is ready to roar on Tuesday, October 1, 2024, if a new Master Contract Agreement is not in place,” ILA president Harold Daggett said in a statement accusing the USMX of underpaying workers. “My members have been preparing for over a year for that possibility of a strike.”
USMX said in a statement that it is “disappointing” that talks with the union broke down, and that “the only way to resolve this impasse is to resume negotiations, which we are willing to do at any time”.
Retailers worked to diversify their supply chains since the Covid crisis left shelves bare, and moved as many shipments as they could to earlier in the year to prepare for the crucial holiday shopping period.
But shoppers will still notice shortages and higher prices if a strike lasts longer than “a couple of days,” Gold said.
Food retailers and suppliers are also “concerned about the potential effects a port strike would have on the food industry’s operations,” the Food Industry Association’s Doug Baker said in a statement.
But he added that the association was “confident that the food industry will be able to adapt to these rapidly evolving circumstances and find solutions to keep goods flowing should a strike occur”.
Consumer packaged goods manufacturers are not so confident. They fear they will not be able to reschedule or reroute shipments because many of the ingredients they import are perishable.
“This is not an easily resolved thing,” Madrecki said. “We’re kind of pessimistic at this point.”
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