US Port Labor Dispute Poses Risks to Product Range, Reports Reuters

Some 45,000 union workers may go on strike at seaports along the U.S. East and Gulf Coasts on October 1, potentially disrupting essential trade routes just weeks before the presidential election.

A JPMorgan analysis indicates that such a strike could result in an estimated $5 billion daily loss to the U.S. economy.

This work stoppage could affect 36 ports responsible for handling roughly half of the country’s ocean imports. As a result, a variety of goods, including bananas, clothing, and cars, could experience reduced availability. Additionally, this could lead to weeks of delays at ports and possible increases in shipping costs, further burdening consumers already grappling with rising housing and food prices.

### The Current Situation

Negotiations between the International Longshoremen’s Association (ILA), which represents workers from Maine to Texas, and the United States Maritime Alliance have reportedly reached a standstill over compensation issues. The current six-year contract is set to expire at midnight on September 30, marking the first potential strike for the ILA since 1977.

The administration has stated it will not pursue mediation efforts, unlike last year’s West Coast contract discussions, and officials indicate the president will not intervene to prevent a strike.

A prolonged strike could lead to shortages and increased costs across various industries.

### Role of Longshoremen

Longshoremen, or stevedores, are responsible for handling cargo from ships. Primarily working with container vessels, they also manage loading and unloading for car carriers and cruise ships, operate cranes, secure containers, and process shipping documentation.

### Impact on Key Industries

Ports affected by the upcoming contract negotiations are crucial for vehicle imports, with $37.8 billion worth handled within the past year. The Port of Baltimore stands out as the leading hub for automobile shipments. Auto parts also comprise a significant portion of East Coast and Gulf imports, with logistical challenges particularly surrounding rerouting from Europe.

These ports are also essential for machinery and manufactured goods, contributing to considerable figures of $97.4 billion, $16.2 billion, and $15.7 billion, respectively.

### Agricultural and Pharmaceutical Imports

Approximately 14% of U.S. agricultural exports transported by water would be threatened by a strike. Estimates suggest these exports could be valued at around $318 million weekly. Moreover, over half of the U.S. agricultural imports would also be at risk, leading to potential economic repercussions exceeding $1.1 billion per week.

The East and Gulf Coasts are vital for the import of bananas, coffee, and cocoa, as well as for exports of cotton and various agricultural products. Refrigerated products, such as meat and eggs, would face severe challenges, with a substantial percentage of exports using East Coast and Gulf ports for transportation.

Pharmaceuticals would also be heavily impacted; over 91% of U.S. pharmaceutical containerized imports and exports flow through these ports, with significant portions of lifesaving medications moving from specific locations.

### Consumer Goods, Energy, and Military Operations

Retail operations rely on these ports for roughly half of all shipping volumes, particularly as retailers prepare for the holiday season. The affected ports handle significant imports of apparel and furniture values in the tens of billions.

While the Gulf Coast ports are critical for oil and gas shipments, they would largely remain unaffected by a strike concerning labor-intensive cargo. Nevertheless, the ILA has committed to processing military shipments and continuing services for passenger cruise lines during any work stoppage.

### Consequences of a Strike

A strike would lead to increased shipping costs and extensive delays. Five major ports involved in negotiations – New York and New Jersey; Savannah; Houston; Norfolk; and Charleston – processed over 1.5 million twenty-foot equivalent units (TEUs) valued at $83.7 billion in August alone.

Immediate trade disruptions from a strike would result in supply chain complications, with analysts predicting a backlog clearance could take four to six days following a one-day strike. Warnings from a major transportation provider suggest that a week-long work stoppage could require weeks to recover from, with backlogs and delays compounding each day.