The Biden administration breathed a sigh of relief on Thursday when the union representing port workers called off a strike that threatened mass disruption of goods just weeks before November’s election.
But the dispute between the International Longshoremen’s Association (ILA) and the nation’s port operators is not yet over, and could hand whoever wins the White House their first political crisis come January.
The agreement to call off industrial action expires on 15 January, and if a new contract is not agreed by then, the ILA could take further action. The impact of which is likely to be felt worldwide.
As many Americans learned during the pandemic, the supply chain is somewhat fragile.
Imported goods made abroad are packed on to massive shipping containers that travel the seas to reach American shores. Once they arrive at a port, the containers are removed from the ships to be put in warehouses. The goods are then taken by truck or train to get to their destinations.
If one part of the chain is interrupted, there can be ripple effects.
That’s why the dockworkers’ strike that started on Tuesday was such a big deal. Goods shipped to a port on the east coast or Gulf coast of the US could not move along until the strike was called off.
The first of its kind since 1977, the dock strike probably cost the economy at least $5bn a day.
The ILA, representing 45,000 workers across 36 ports, is calling for higher wages and forbidding automation and semi-automation at the ports, as a job protection measure.
The union and the United States Maritime Alliance (USMX), a consortium of carriers and terminal operations, have reached a tentative deal with a reported 62% increase in wages over six years. Other issues, including automation, remain unresolved.
As talks continue, here’s more on what’s at stake for the US economy.
This strike ended after three days. What happened?
For most Americans, the impacts of the strike were minimal.
Companies knew the strike was a possibility for at least a few weeks, said Keely Croxton, professor of logistics at Ohio State University, and have been ramping up shipments and expediting getting containers off ships before the strike.
What if a new strike goes on for more than a couple of weeks?
The goods coming into the east and Gulf coast ports are largely shipments from Europe and South and Central America. The strike does not affect cruise ships or military cargo.
This means that some fresh fruit and vegetables transported in refrigerated containers could be affected first if the strike lasts more than two weeks. Many of the bananas consumed in the US, for example, come from South and Central America. Once the supply of bananas that has already gone through the ports starts to dwindle, the grocery store stock can be affected.
But economists say that only certain parts of the grocery store shelves might disappear.
“It would be selective to begin with. The broader macro impact wouldn’t start to build unless this was going on for a very long time,” Michael Pearce, deputy chief US economist at Oxford Economics, said. “If you start to get a strike lasting three to four weeks, that’s when you start to see a more sustained period of disruption that we might need to start worrying about in terms of broader ripples through the economy.”
If a strike lasted for more than a few weeks, carriers could try to start shipping things in through the west coast ports. Price increases could come from carriers shifting the costs of that on to consumers, Pearce said.
Economists emphasize that the impacts of a strike would be different than what was seen during the pandemic, when there were widespread shortages, first induced by panic-buying and later continued when parts of the supply chain were disrupted by lockdowns.
Companies would be better prepared for this than they were for the pandemic, Croxton said. “Companies learned from the pandemic and have developed a more robust sourcing and distribution strategy, and have found ways to be more flexible to respond to disruptions like this.”
How would it affect other workers?
Workers in other industries in the supply chain could see the most immediate impact, said Pearce. If the number of goods flowing through the supply chain slows, so will their work.
“Those jobs in warehousing logistics, forwarding wholesalers – those that rely on the flood of goods coming through the ports, there will be a disruption of those businesses,” Pearce said. “If this goes on for more than a week or so, you’ll start to see reports of furloughs or temporary layoffs in those sectors.”
