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    • Port strikes on the East and Gulf coasts could upend the economy and the holidays
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    Port strikes on the East and Gulf coasts could upend the economy and the holidays

    Vaseline Posted on

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    Longshoremen at ports from Maine to Texas are officially on strike after the clock struck midnight, with no new labor agreement in the works.

    Thirty-six ports on the East and Gulf Coasts were closed as 45,000 union workers walked off the job after labor negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) stalled. The strike exacerbates some temporary port closures in places like Florida, the Carolinas and Georgia in the wake of Hurricane Helene.

    The ILA strike is the first at these ports since 1977 and could cost the economy up to $5 billion a day, upend Christmas shopping for millions of Americans and determine whether or not many small and medium-sized businesses and farmers make a profit. lose money this year, experts said.

    “Every day that a ship does not enter port costs money and sometimes a lot of money… which is ultimately passed on to consumers,” Stamatis Tsantanis, chairman and CEO of shipper Seanergy Maritime and United Maritime, said in a statement.

    Length is important

    Now that the strike is underway, experts will turn their attention to how long the strike could last. Each day of the strike could cost the economy up to $5 billion a day as imports and exports are blocked, some economists estimate.

    “It’s not just about the shutdown, but also about the recovery period and how long it takes to get everything up and running again,” said Jonathan Gold, vice president of supply chain and customs policy at the Nation Retail Federation.

    For each day of the strike, it will take about three to five days to clear the backlog and resume normal activities, he said. “The longer it goes on, the worse it gets,” he said.

    A 2002 port strike lasted 11 days before the Bush administration invoked the Taft-Hartley Act to force the ports to reopen. The law allows the federal government to seek an injunction against a strike so that both sides can continue negotiations during an 80-day cooling-off period. It took six months to recover from those 11 days, Gold said.

    Despite many industry groups calling for intervention, the Biden administration said it does not plan to invoke Taft-Hartley. Instead, it encouraged continued negotiations, saying in a statement that it would closely monitor supply chain disruptions and “respond quickly to help minimize potential disruptions in the event of a prolonged strike by engaging in extensive discussions with the ports, state and local officials, industry, the labor market, maritime carriers, rail and trucking companies.”

    What can you expect: A port strike could cost the economy $5 billion a day. Here’s what it could mean for you

    What is affected by the strike?

    Import: With about half of U.S. ocean imports passing through East Coast and Gulf Coast ports, a wide range of products are affected, including agricultural products, automobiles, auto and machinery parts, apparel, pharmaceuticals, wine and spirits beverages, holiday items such as toys and seafood. said experts.

    “Any strike that lasts longer than a week could cause shortages of goods for the holidays,” said Eric Clark, portfolio manager of the Rational Dynamic Brands Fund. “Retailers are lean right now, so inventory would decrease and shipping and merchandise prices would go vertical for a period of time. We could get six months of inflation similar to or worse than the peak inflation levels of a year ago.”

    Some say small and medium-sized businesses could be hit the hardest.

    “Large companies with dedicated purchasing departments and significant access to capital have been preparing for this strike for some time, and many have ordered excess materials that they could finance with cheaper debt,” said Ben Johnston, Chief Operating Officer at Small Business. lender Kapitus.

    “However, small businesses have been less likely to be able to order early and in large quantities and have been less likely to obtain the capital needed to pre-order larger quantities of goods,” he said.

    Export: Companies selling products in international markets would suffer, experts say. Agricultural exporters of soybeans and poultry, for example, won’t be able to send their goods abroad and could end up losing market share, or worse, losing money because their goods are perishable, they said.

    Vacancies: For example, companies that keep small inventories to keep costs down might have to close assembly lines during a prolonged strike, Gold said. This would happen at a time when the labor market is already cooling down.

    Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news, every Monday through Friday mornings.

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