Longshoremen strike 36 Eastern and Gulf Coast ports closed

• Dock workers walked off the job at ports along the East and Gulf coasts, from Maine to Texas, on Tuesday morning.
• The strike is set to disrupt major imports a month before the US election.
• The federal government could step in to mediate, but the upcoming election complicates matters.

Tens of thousands of dock workers are on strike after the International Liquidators Association and the US Maritime Alliance, which represents dozens of Eastern and Gulf Coast ports, failed to reach a consensus on a new labor contract.

The withdrawal is scheduled to close 36 ports in the region, according to the Associated Press, which handles about half of all U.S. ocean imports and could cost the economy $540 million a day, according to an analysis by The Conference Board.

The union is demanding 77 percent wage increases over the next six years to keep up with inflation, a figure that would still put them below many of their West Coast dockworker counterparts, according to CBS News.

The strike comes at a critical economic and political time: about a month after the US presidential election, as consumers and businesses alike begin to feel relief from recent inflation and just ahead of the busy holiday season.

And it comes right after Hurricane Helenewhich killed more than 100 people and left devastation in several states, including widespread flood damage that could leave cities like Asheville, North Carolina, without running water for weeks.

Flooding and debris made many roads and highways in the Southeast impassable, or at least difficult to cross, adding to the pressure on the supply chain.

Big hits for small businesses

While there was a glimmer of hope that a contract could be reached after both sides exchanged wage offers late Monday, the groups could not reach an agreement, with automation and wages being the major points of contention throughout the negotiations.

Consumers won’t feel an immediate effect in their pockets, two supply chain experts told Business Insider, but the strike will likely cause major delays and disruptions for everything from food to auto parts.

The strike had been in the making for months following increasingly aggressive relations between the two sides.

As a result, most large retailers have had time to prepare, stock their supply chains and place holiday orders ahead of time, said Brian Pacula, supply chain partner at consulting firm West Monroe.

“The Fortune 100s — your Walmarts and even your Home Depots — will probably be fine,” Pacula said. “They generally have very mature supply chains.”

Smaller and medium-sized businesses, however, will likely bear the brunt of the pullback, especially those waiting for deliveries from Europe, said Michael Yamartino, CEO of post-buyout firm Route. Rerouting items to the West Coast will cost businesses time and money.

“Since these are East Coast ports, those who have suppliers in Europe will be affected,” Yamartino said. “The auto industry tops that list.”

Trade groups have called on President Joe Biden’s administration to help negotiate a deal, but the looming election complicates government involvement.

Over the weekend, President Joe Biden, who has cast himself as a staunch supporter of workers, said he had no plans to step in and stop the looming strike. The International Longshoreman’s Association previously stated that they did not want government intervention and preferred to negotiate independently, according to the Association of Retail Industry Leaders.

Under the Taft-Hartley Act, the president has the power to seek a court order that would trigger a return-to-work requirement while the two sides continue negotiations if the waiver affects national security.

But if the strike lasts more than a few weeks, Pacula said he expects the federal government to get involved, regardless of the implications of the election.

“It will be crippling to our economy,” Pacula said. “This can’t be long.”