US Port Labor Dispute Poses Risks to Product Availability

A potential strike involving around 45,000 union workers at seaports along the U.S. East and Gulf Coasts could commence on October 1, disrupting critical trade routes just weeks ahead of the presidential election.

Such a strike would impact 36 ports responsible for approximately half of all U.S. ocean imports. This disruption could affect the availability of a wide range of goods, from bananas and clothing to vehicles transported via containers, creating significant backlogs at ports. Additionally, shipping costs might rise, potentially adding to the frustrations of voters already dealing with inflation in housing and food, according to industry experts.

The International Longshoremen’s Association (ILA), which represents workers at the affected ports stretching from Maine to Texas, and the United States Maritime Alliance, representing employers, have reportedly reached an impasse in negotiations regarding wages. The existing six-year contract is set to expire at midnight on September 30.

If the strike occurs at all East Coast and Gulf Coast ports, it would mark the first work stoppage for the ILA since 1977. The administration is not involved in mediating a resolution, differing from its intervention in last year’s West Coast labor talks, and officials have indicated that federal powers will not be employed to prevent the strike.

The ports in question are significant handlers of vehicle imports, having managed $37.8 billion worth in the 12 months leading to June 30, 2024. Baltimore, Maryland, is particularly notable for leading the nation in car shipments. Furthermore, the East Coast and Gulf coasts also receive substantial shipments of auto parts, which are more challenging to reroute compared to those from Asia.

These ports are also critical for importing various types of machinery and goods, with combined values reaching $97.4 billion for machinery, $16.2 billion for fabricated steel, and $15.7 billion for precision instruments.

In agriculture, three-quarters of the United States’ banana imports from countries such as Guatemala and Ecuador arrive at these ports. A potential strike could disrupt container exports of soybeans and other agricultural products and would significantly impact the export of chilled or frozen meat and eggs. The beef and pork export sector, valued at $18 billion annually, heavily depends on refrigerated containers that cannot remain idle for extended periods.

Moreover, approximately 45% of U.S. pork exports and 30% of beef exports utilized East Coast and Gulf Coast ports in the first half of the year. Over a quarter of all U.S. egg exports and around 70% of poultry exports also transit through these ports.

Regarding consumer goods, retailers constitute nearly half of all container traffic, with many already expediting shipments for the holiday season. The affected ports handle more than half of the country’s apparel imports, valued at $32.8 billion, and furniture valued at $23.4 billion.

While major oil and gas transfers at port locations like Houston and New Orleans may remain unaffected, the labor-intensive container shipping operations would be significantly impacted by a strike.

Overall, a strike would lead to increased shipping costs and delays. The five primary ports involved – New York and New Jersey, Savannah, Georgia, Houston, Norfolk, Virginia, and Charleston, South Carolina – managed over 1.5 million twenty-foot equivalent units (TEUs) valued at $83.7 billion in August. This cargo included a substantial share of inbound shipments.

Logistics experts caution that trade disruptions would occur immediately, driving up rates and affecting the U.S. economy. Analysts predict that clearing a backlog from a one-day strike could take four to six days, while a week-long shutdown might necessitate up to six weeks for recovery, compounding the delays with each passing day.