(This story has been updated to add new information.)
Americans may once again face high prices and shortages this holiday season, but this time it will be caused by worker strikes rather than a global pandemic.
The International Longshoremen’s Association (ILA) said as of Thursday, labor negotiations with the United States Maritime Alliance (USMX) remained stalled, with about 45,000 union members at 36 ports on the East Coast and Gulf Coast in 10 He announced on May 25th that he was ready to walk. This is the first time it has topped the charts since 1977.
Strikes could lead to shortages of certain items and drive up prices for voters already frustrated by housing and food inflation, experts said. Experts say these ports handle about half of U.S. ocean imports, including food, clothing, auto parts, containerized vehicles and holiday toys.
“Disruptions in the supply chain will undoubtedly lead to higher prices across the board, impacting consumers’ ability to find the toys they’ve been looking for for weeks and months,” said Greg Ahern, president and CEO of the Toy Association. will be given.”
Take advantage of high interest rates: Today’s best CD rates
Diversification didn’t work
Companies will ship more goods through East Coast and Gulf ports after the pandemic clogged West Coast ports and left more than 150 container ships waiting to enter ports in February 2022, according to the Department of Transportation Experts say it has begun.
At the same time, to reduce dependence on China, companies that faced delays in economic reopening and increased government scrutiny after the pandemic began sourcing from different countries, particularly Southeast Asia, said Chris Tan, a distinguished professor at the University of California, Los Angeles. said. Specializes in supply chain management.
Many companies shipping goods from Southeast Asia use East Coast ports because of their proximity, he said.
“With these changes in power relations, the impact of the East Coast (strike) has become more pronounced,” Tan said.
What products are affected?
In addition to holiday supplies, other items that could experience shortages or price increases include:
Seafood such as cod from Iceland and Canada and shrimp from Thailand and Ecuador. “These items are perishable in refrigeration, so it’s not easy to transport them by train,” Tan said. “And airships are very expensive.” Electronics such as cell phones and computers now come from Southeast Asian countries such as Vietnam, Indonesia and Thailand, rather than China, and are transported via East Coast ports. Yes, Mr Tan said. “Since it is a higher-value product, it will need to be transported by air, but if negotiations are not concluded within a month or so, there may be a shortage of medicines,” Tan said. Automobiles and auto parts. The Port of Baltimore, Maryland, leads the nation in automobile shipments. Experts say there could be a shortage of European cars as they transit through the port. Auto parts from Europe often go through ports on the East Coast and Gulf Coast. mechanical parts. East Coast ports also ship more machinery, steel products and precision equipment than any other U.S. port, according to S&P Global Market Intelligence Bananas. Three-quarters of the nation’s bananas come through ports on the East Coast and Gulf Coast, said Jason Miller, interim dean of Michigan State University’s School of Supply Chain Management. “There’s zero chance of all these imports moving through the West Coast, and the low dollar value per unit weight of bananas means it’s not economical to put them on a plane,” he said in a LinkedIn post. It means that.” “Additionally, fresh produce cannot be brought in ahead of schedule.”
Can businesses reroute shipments?
Jonathan Gold, vice president of supply chain and tariff policy for the National Retail Federation trade group, said some companies prepared early:
Accepting cargo earlier than usual and redirecting some cargo to West Coast ports
However, these steps have limitations. “Retailers can’t bring in everything,” he says.
Some businesses may face inventory space constraints, while there are no suitable alternative routes for fresh produce and other products, Tan said. Panama Canal operations are recovering from a drought, ships in the Red Sea have been under attack by the Houthi rebels, and the Cape of Good Hope is taking longer to complete, he said.
Additionally, “due to the long lead times for toy products, the transportation logistics have been in place for several months and a significant amount is already in transit,” Ahern said. “This makes it extremely difficult for shipments destined for the U.S. market via East Coast and Gulf ports, or for reprocessing products that are no longer defined.”
Flashback: Dark October has arrived: Transportation delays, labor shortages disrupt supply chains as holiday season begins
If there is a hit, length is important
Some experts said the post-strike period could also be disruptive.
“It’s not just about shutting down, it’s also about the recovery period and how long it will take to get things up and running again,” Gold said.
It typically takes three to five days to complete a strike, he said, but “the longer the strike goes on, the worse the situation gets.”
“In 2002, when there was an 11-day lockout on the West Coast due to labor negotiations, it cost (the economy) $1 billion a day and it took six months to recover and get supplies out. ,” Gold said. “Trade is higher now than it was in 2002 and could take even longer.”
At the time, the Bush administration invoked the Taft-Hartley Act to force the ports to reopen. The law allows the federal government to seek a court injunction to prevent strikes and allows both sides to continue negotiations during an 80-day cooling-off period.
Will the Biden administration help?
The Biden administration has refused to invoke the Taft-Hartley Act. Instead, White House officials encouraged continued discussions despite months of requests for help from retail, agriculture, commerce, auto care, toys and other groups.
“This is an election year, so Biden may step in to help (Democratic presidential candidate Kamala) Harris,” Tan said. “They may not say it publicly, but behind the scenes they may help negotiate because it’s important to Harris. Any disruption could affect the election.”
White House press secretary Robin Patterson characterized the U.S. supply chain and economy as “more resilient than when I took office,” adding, “The Supply Chain Disruption Task Force is operational and we are looking forward to the potential.” “We are prepared to act quickly to minimize the risk.” Work broadly with ports, state and local officials, industry, labor, shipping, railroad, and trucking companies to prevent disruption in the event of an extended strike. ”
No matter what happens, the price will go up and the story will end.
Experts said Americans could soon see prices rise if longshoremen go on strike.
If dockworkers agree to the deal, “labor costs will go up,” Tan said. “So consumers will continue to pay higher prices. Consumers will have to learn to adjust and adapt, but unfortunately things will become more expensive.”
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.