The US could have Seen Shortages and Higher Retail Prices if A Dockworkers Strike had Dragged on

AP

10:42 JST, October 4, 2024

NEW YORK (AP) — U.S. ports from Maine to Texas shut down this week when the union representing about 45,000 dockworkers went on strike for the first time since 1977.

Workers began walking picket lines early Tuesday near ports all along the East and Gulf coasts.

A shutdown lasting more than a few weeks would have had the potential to raise prices and create shortages of goods throughout the country as the holiday shopping season — along with a tight presidential election — approaches.

But the union representing the striking U.S. dockworkers, the International Longshoremen’s Association, reached a deal Thursday to suspend the strike until Jan. 15 to provide time to negotiate a new contract. The union’s members will resume working immediately at least until January.

What are the issues in the dockworkers strike?

The union is demanding significantly higher wages and a total ban on the automation of cranes, gates and container-moving trucks that are used in the loading or unloading of freight at 36 U.S. ports. Those ports handle roughly half of the nations’ cargo from ships.

The contract between the ILA and the United States Maritime Alliance, which represents the ports, expired Tuesday.

The union’s opening demand was a 77% pay raise over the six-year life of the contract, with Daggett saying that it would make up for inflation and years of small raises. ILA members make a base salary of about $81,000 per year, but some can pull in over $200,000 annually with large amounts of overtime.

On Monday, before workers hit the picket lines, the alliance said it had increased its offer to 50% raises over six years, and it pledged to keep limits on automation in place from the old contract. The alliance also said its offer tripled employer contributions to retirement plans and strengthened health care options.

Which ports were affected?

While any port can handle any type of goods, some ports are specialized to handle goods for a particular industry. The ports affected by the shutdown included Baltimore and Brunswick, Georgia, the top two busiest auto ports; Philadelphia, which gives priority to fruits and vegetables; and New Orleans, which handles coffee, mainly from South America and Southeast Asia, various chemicals from Mexico and North Europe, and wood products from Asia and South America.

Other major ports affected include Boston; New York/New Jersey; Norfolk, Virginia; Wilmington, North Carolina; Charleston, South Carolina; Savannah, Georgia; Tampa, Florida; Mobile, Alabama; and Houston.

Can the government intervene?

If a strike were deemed a danger to U.S. economic health, President Joe Biden could have, under the 1947 Taft-Hartley Act, sought a court order for an 80-day cooling-off period. That would have suspended the strike.

But during an exchange with reporters on Sunday, Biden said “no” when asked if he planned to intervene.

“Because it’s collective bargaining, I don’t believe in Taft-Hartley,” Biden said.

How are states responding?

Florida Gov. Ron DeSantis said he would order the Florida National Guard and the Florida State Guard to the state’s ports to “maintain order” and possibly help resume operations as residents and business recover from Hurricane Helene.

“This has the potential of really disrupting the hurricane recovery and of hurting the people who were victims of the storm,” DeSantis said at a Thursday news conference. He spoke before news emerged that the union had agreed to suspend its walkout.

Maryland Gov. Wes Moore, Massachusetts Gov. Maura Healey, New Jersey Gov. Phil Murphy and New York Gov. Kathy Hochul put out a joint statement saying they were monitoring the situation for incidences of price gouging.

How will this affect consumers?

With the strike being suspended, consumers probably wouldn’t notice any significant shortages or price hikes. Had the stoppage persisted for more than a month, it would have been a different story, depending on what you’re shopping for. Most holiday retail goods have already arrived from overseas, so there is a buffer. Prices on everything from fruits and vegetables to cars may have headed higher, at least temporarily, if it had dragged on.

That would have been unwelcome news after snarled supply chains sent prices jetting higher at the end of the pandemic, and could have been potentially damaging politically with Election Day about a month away.

The ‘sell-by’ clock never stops ticking

Container loads of highly perishable bananas had been stuck at some ports.

Before the suspension was announced, Agriculture Secretary Tom Vilsack noted that limiting the duration of the strike was the key to preventing shortages and higher prices.

Businesses had made contingency plans

Since the major supply chain disruption in 2021, retailers have adapted to supply chain disrupters being the new norm, said Rick Haase, owner of a mini-chain of Patina gift shops in and around the Twin Cities in Minnesota.

“The best approach for Patina has been to secure orders early and have the goods in our warehouse and back rooms to ensure we are in stock on key goods,” Haase said.

Still, housing those goods for longer can have an inflationary impact at the register because retailers will need to recoup those storage costs, or absorb them.

Jay Foreman, CEO of Basic Fun, a Boca Raton, Florida, the maker of Care Bears and Lincoln Logs, has already shifted all of the toy company’s container shipments away from the East Coast to West Coast ports, primarily Los Angeles and Long Beach. That too, comes with a cost.

The maneuver added anywhere from 10% to 20% in extra costs that his company will have to absorb because Basic Fun’s prices for the next 10 months are locked in with retailers. But Foreman would consider raising prices during the second half of 2025 if the strike is prolonged.

Daniel Vasquez, who owns the import, export specialty company Dynamic Auto Movers in Miami, increased inventory, specifically for vehicles that take longer to ship, in anticipation of a strike.

He too stopped relying on one port or shipping partner and has expanded his relationship with smaller ports and shipping companies that can bypass congested areas.