US port labor dispute threatens product range By Reuters

(Reuters) – About 45,000 union workers could walk off the job at seaports on the U.S. East and Gulf Coast on Oct. 1, cutting off vital trade arteries just weeks before the nation’s presidential election.

A JPMorgan analysis estimated that a strike could cost the US economy $5 billion a day.

The strike could hit 36 ​​ports that handle about half of US ocean imports. This could affect the availability of a range of goods from bananas to clothing to cars shipped by container, while creating backlogs of several weeks at ports. It could also cause increases in shipping costs that could be passed on to voters already frustrated by housing and food inflation, according to logistics experts.

WHAT IS THE PROBLEM?

The International Longshoremen’s Association (ILA), which represents workers at ports from Maine to Texas, and the United States Maritime Alliance appear to have reached an impasse over wages. The current six-year deal expires at midnight on September 30.

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

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

A widespread and prolonged strike could cause shortages and cost increases in a wide range of industries.

WHAT DO LONGSHOREMEN DO?

Liquidators, also called stackers, handle cargo from incoming ships. They mostly work on container ships, but they also work with car carriers and cruise ships.

They operate cranes that pull containers off ships to “light” them, secure cargo containers to prevent them from falling during transit, and process paperwork.

CARS, MACHINES AND PARTS

Ports covered by the contract handled $37.8 billion worth of vehicle imports during the 12 months ending June 30, 2024, according to S&P Global Market Intelligence. The Port of Baltimore, Maryland, leads the nation in car shipments.

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.

Ports also lead the U.S. in shipments of machinery, fabricated steel and precision tools, reaching $97.4 billion, $16.2 billion and $15.7 billion, respectively, S&P Global data showed Market Intelligence.

AGRICULTURE AND PHARMACEUTICALS

About 14 percent of all U.S. agricultural exports, by volume, would be at risk of a strike. Over a one-week period, the potential value of those exports is estimated at $318 million, according to the American Farm Bureau Federation.

Additionally, 53 percent of U.S. agricultural import volume is vulnerable to a strike, resulting in a potential economic impact of more than $1.1 billion per week, the Farm Bureau said.

Three-quarters of the nation’s banana imports from countries such as Guatemala and Ecuador land in East Coast and Gulf ports, said Jason Miller, acting chairman of Michigan State University’s department of supply chain management.

Separately, the US imports coffee and cocoa in large quantities and exports cotton.

A strike would also affect containerized exports of soybeans, soybean meal and other products and have a significant impact on refrigerated or frozen meat and eggs, said Mike Steenhoek, executive director of the Soy Shipping Coalition.

The $18 billion annual U.S. beef and pork export market and the $5.8 billion poultry and egg export sector rely on refrigerated containers that cannot stand inactive for a long time.

About 45 percent of all U.S. pork exports and 30 percent of U.S. beef exports were shipped through East Coast and Gulf Coast ports in the first seven months of this year, a spokesman for the U.S. Fed. for Meat Export, Joe Schuele.

More than a quarter of all U.S. egg and egg product exports and about 70 percent of all poultry exports are shipped from East Coast and Gulf Coast ports, according to Customs and Export Council data of Eggs and Poultry of the USA.

The affected ports also handle more than 91% of containerized imports and 69% of US containerized pharmaceutical exports, according to Everstream Analytics.

More than one-third of containers leaving the U.S. with life-saving drugs leave the port of Norfolk, Virginia, while nearly one-third of containerized pharmaceutical imports enter the country through the port of Charleston, South Carolina.

CONSUMER GOODS, ENERGY, MILITARY AND CRUISES

Retailers account for about half of all container volumes. Many US retailers have already rushed to ship holiday goods.

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

Although the Gulf Coast ports of Houston and New Orleans are major oil and gas shipping hubs, those cargoes would be largely unaffected by a strike involving more labor-intensive containerized cargo. The same is true of coal exports from Norfolk, Va., experts said.

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

HIGHER COSTS, BIG DELAYS

In broad terms, a strike would increase costs for transport, also imposing long delays.

The top five ports in the negotiating group – New York and New Jersey; Savannah, Georgia; Houston; Norfolk; and Charleston — handled more than 1.5 million 20-foot equivalent units (TEUs) valued at $83.7 billion in August, according to John McCown, senior fellow at the Center for Maritime Strategy. About two-thirds of this cargo was in, while the rest was out, he said.

The trade disruption from a work stoppage would begin immediately, driving rates higher and impacting the US economy, logistics experts warned.

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

Maersk, one of the largest shipping providers and a member of the employers’ group, warned that a one-week stoppage could require up to six weeks of recovery time, “with significant delays getting worse with each passing day “.