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strikes at more than 30 ports in the united states are "ready to go", and a potential supply chain crisis is quietly approaching.

the international longshoremen's association (ila) recently said that if it fails to reach a new labor agreement with the united states maritime union (usmx) before the contract expires on september 30, its 25,000 members will go on strike. on september 17, the ila issued a notice saying that it was "prepared to take final action to win a fair contract and will go on strike on october 1."

the ceo of flexport, one of the largest supply chain logistics operators in the united states, warned that an impending port strike "could shut down all east coast and gulf coast ports 36 days before the election, becoming the biggest wild card in the presidential election."

strikes before the election, what happened?

the united states maritime union (usmx), which represents carriers and terminal operators, and the international longshoremen's association (ila), which represents 85,000 workers on the east coast and gulf coast, are demanding significant wage increases for their members and assurances that workers are not "threatened" by automation.

in june, the ila union walked out of the bargaining table, claiming that an automated system introduced at the port of mobile, alabama, that “automatically handles trucks without ila labor” violated the existing contract.

the contract covers ports from maine to texas, including new york, savannah, houston, miami and new orleans, which together account for 41% of u.s. port throughput.

executives and economists had expected washington to intervene as it did to prevent a 2022 freight rail strike, but president joe biden said last week he would not block labor action at the ports.

in its latest statement last tuesday, usmx said:

“it is disappointing that we have reached a point where the ila is unwilling to restart the dialogue unless all demands are met. the only way to resolve this impasse is to resume negotiations, and we stand ready to do so.”

a strike would have a "devastating impact"

the strike will affect ports from maine to texas and paralyze supply chains more than the shutdowns caused by the coronavirus pandemic, according to the union. a coalition of 177 trade groups warned last week that "closing these ports would have a 'devastating impact' on the u.s. economy."

every year, $240 billion worth of goods pass through the two ports, and such trade supports more than 600,000 local jobs. the oxford economics institute said in a report:

“the first work stoppage since 1977 could involve as many as 45,000 workers at ports that account for 60% of u.s. shipping traffic, causing significant disruption to freight traffic.”

michael every of rabobank also said that "us companies may miss a key sales peak period."

data shows that u.s. port trade volume is about $2.12 trillion, of which 72% will come to a standstill, and a one-day strike will take six days to recover. a week-long strike in october will cause bottlenecks and last until mid-november, not including transport disruptions caused by the houthi armed forces in the red sea.

the last major shutdown was an 11-day shutdown at west coast ports in 2002, which cost $1 billion a day and led to a six-month backlog.

rabobank speculates that if goods are forced to be diverted to u.s. west coast ports, asia-u.s. freight rates could jump to $20,000, far higher than the peak of the last supply chain crisis. analysts believe this means companies with low profit margins may choose not to import at all, resulting in empty shelves.

business groups worry that such severe supply chain disruptions will significantly increase the cost of imported materials, exported products and warehousing and transportation, thereby raising consumer prices. in addition, some have warned that the strike could reduce harris's chances of winning on november 5.

port authority: coordinate to respond to the impact, biden: no intervention

a spokesperson for the port authority of new york and new jersey said on friday that the port authority is coordinating with partners throughout the supply chain to address any impact from a potential work stoppage while the ila and usmx are being negotiated.

“we urge both sides to find common ground and keep goods flowing for the benefit of the national economy.”

but the port authority does not participate in negotiations between them, but rents space at the port to shipping companies. rooney, president of the port authority of new york and new jersey, said terminal operators and ocean carriers are "working hard to bring in as many ships as possible before the strike." related measures include working with truck drivers and railroads to move as much cargo as possible as quickly as possible.

rooney said:

“the two ports are currently unloading about 20 large container ships per week and are expected to unload 150,000 containers by the strike deadline. at the same time, ocean carriers are beginning to impose embargoes on export cargo so that cargo does not enter east coast and gulf coast ports and then get stuck there.”

during the strike, container ships carrying imports to the ports of newark and elizabeth, new jersey, and staten island, new york city, will be anchored at designated locations in or along the coast of new york harbor or remain offshore until they can be brought in. after the strike ends, the coast guard and u.s. customs and border protection will monitor ships arriving at port facilities.

president biden said last week that he would not block labor action at the port. although the taft-hartley act gives the president the power to impose an 80-day cooling-off period to postpone a strike, he has said he does not plan to do so given the impact such a move could have on union votes.