Why workers plan to strike at ports across U.S. East — and how it could cause consumer chaos

Some 45,000 union workers could walk off the job at seaports on the U.S. East and Gulf Coasts on Oct. 1, cutting off vital trade arteries just weeks ahead of the U.S. presidential election.

A JPMorgan analysis projected that a strike could cost the U.S. economy $5 billion US daily.

The strike could hit 36 ports that handle about one-half of U.S. ocean imports. That could affect the availability of a range of goods shipped via container, from bananas to clothing to cars, while creating weeks-long backlogs at ports.

It could also stoke shipping cost increases that may be passed on to voters already frustrated with housing and food inflation, according to logistics experts.

What's the issue?

The International Longshoremen's Association (ILA) union, which represents workers at ports from Maine to Texas, and the United States Maritime Alliance employer group appear to have hit an impasse over pay. The current six-year contract expires at midnight on Sept. 30.

A strike at all East Coast and Gulf of Mexico ports would be the first for the ILA since 1977.

The White House said it is not trying to help broker a deal, as it did last year during West Coast talks, and a Biden administration official has said the president would not use his federal powers to block a strike.

A widespread and lengthy strike could cause shortages and cost increases across a broad range of industries.

What do longshoremen do?

Longshoremen, also referred to as stevedores, handle cargo from incoming ships. They mostly work on container ships, but also do some work with car carriers and cruise ships.

They operate cranes that pluck containers from ships to "lashing," securing cargo containers to prevent them from falling off during transit, and process paperwork.

Autos, machinery and parts

Ports covered by the contract handled $37.8 billion US worth of vehicle imports during the 12 months that ended June 30, according to S&P Global Market Intelligence. Auto parts are also a key import on the East Coast and Gulf of Mexico, with shipments from Europe more difficult to reroute than those from China, logistics experts said.

The ports also lead the U.S. in shipments of machinery, fabricated steel and precision instruments, coming in at $97.4 billion, $16.2 billion and $15.7 billion US, respectively, S&P Global Market Intelligence data showed.

Agriculture and pharmaceuticals

About 53 per cent of all U.S. waterborne agricultural imports, by volume, would be at risk from a strike. Over a one-week period, the potential value of those exports is estimated at $1.1 billion US, according to the American Farm Bureau Federation. For agricultural exports, that figure is $318 million US.

Three-quarters of the nation's banana imports from countries like Guatemala and Ecuador land at ports on the East and Gulf Coasts, said Jason Miller, interim chair of Michigan State University's department of supply chain management. The U.S. also imports coffee and cocoa in large volumes and exports cotton.

A strike also would affect container exports of soy products and would have a significant impact on chilled or frozen meat and eggs, said Mike Steenhoek, executive director of the Soy Transportation Coalition. The $18-billion-a-year U.S. beef and pork export market and the $5.8-billion poultry and egg export sector rely on refrigerated containers that cannot sit idle for long.

The affected ports also handle more than 91 per cent of containerized imports and 69 per cent of containerized exports of U.S. pharmaceutical products, according to Everstream Analytics.

Consumer goods, energy, military and cruises

Retailers account for roughly half of all container volumes. Many U.S. retailers have already rushed in shipments of year-end holiday goods.

The ports that would be affected by a potential strike bring in over half of the nation's knitted and non-knitted apparel, valued at $32.8 billion US combined, as well as furniture, valued at $23.4 billion US, according to S&P Global Market Intelligence.

Though the Gulf Coast ports of Houston and New Orleans are major oil and gas shipment hubs, those commodities would remain largely unaffected by a strike involving more labour-intensive container cargo. The same applies to coal exports from Norfolk, Va., experts said.

The ILA, however, has pledged to handle military cargo and to work passenger cruise ships during a strike.

Higher costs, big delays

In broad terms, a strike would raise costs for shipping while also imposing lengthy delays.

The top five ports in the negotiating group — New York and New Jersey; Savannah, Ga.; Houston; Norfolk; and Charleston, S.C. — handled more than 1.5 million 20-foot equivalent units valued at $83.7 billion US in August, according to John McCown, senior fellow at the Center for Maritime Strategy. About two-thirds of that cargo was inbound, while the remainder was outbound, he said.

Trade disruptions from a work stoppage would begin immediately, sending rates higher and rippling through the U.S. economy, logistics experts warned.

Analysts at Sea-Intelligence, a Copenhagen-based shipping advisory firm, estimated that it could take anywhere from four to six days to clear the backlog from a one-day strike.

Maersk, one of the largest providers of ocean transportation and a member of the employer group, warned that a one-week shutdown could require up to six weeks of recovery time, "with significant backlogs and delays compounding with each passing day."