A threatened strike against 36 U.S. ports appears imminent
of ConsumerAffairs
Just as inflation has started to cool, it could flame up again in October and theres not a thing the Federal Reserve can do about it.
The International Longshoremens Association (ILA) is poised to go on strike Tuesday, Oct. 1, shutting down 36 East Coast and Gulf Coast ports from New York to Houston, stopping imported goods from coming in and U.S. exports from going out. According to the union, talks with the United States Maritime Alliance (USMX) have produced no progress.
A strike against these ports would be the first since 1977. However, the U.S. economy has changed greatly since then. In 1977, there were still many U.S. factories and the economy was much less reliant on imports.
A strike would lead to shortages and shortages usually result in higher prices, causing more pain for inflation-weary consumers.
Learning from past experience
Many importers, who learned from past strikes have been rerouting containers via the West Coast in preparation for this, but as the East Coast ports can reach a higher proportion of the U.S. population relative to the West Coast, a four-week or longer port strike could be devastating, James Vanderloo, a supply chain expert with OEC Group, told ConsumerAffairs.
Each day of a strike, the congestion at ports compounds, which takes months to recover. If retail goods are not on the shelves in time for the holidays, it could result in billions of lost revenues which would affect small businesses disproportionately.
Consumers will first notice shortages of perishable products. A lot of seafood is now imported so there could be a lot less fish from Iceland and Ecuador. Fruit, especially bananas, would also be harder to find at supermarkets.
Beyond that, a new computer might be harder to find. Many of those products, as well as essential electronic parts, come from Asia.
New car shortages
Consumers could also see new car and truck shortages, perhaps worse than those experienced during the pandemic. Baltimore is the number one U.S. port for auto imports. New imports could be blocked from dealer showrooms and domestic automakers could face a shortage of parts. And that could idle U.S. car manufacturing plants, resulting in layoffs.
It takes only one part from one supplier running short on inventory to bring an OEM line down, said Mike Klage, vice president of NTG Supply Chain Solutions. Air freight will certainly become a major alternative, especially on European lanes where alternative ocean routings are limited. However, this cannot solve every shortage, particularly if a strike extends from days into weeks.
Vandeloo notes there is a political aspect to this threatened labor dispute because of its timing, and the impact it could have on an economy trying to achieve a soft landing from post-pandemic inflation.
Having this occur during an election year further compounds the stress of the situation since both parties would look to finger-point and have this become an issue that could sway certain voters and generate additional strain on the economy, he said.
While West Coast ports would remain open to imports, both Vanderloo and Klage say they would have difficulty handling all of the blocked import traffic. Additionally, the cost of moving those imports from the West Coast to the Eastern U.S. would add to inflationary pressures.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-09-30 10:54:38
