Oct 01, 2024
Dockworkers at 36 ports along the East and Gulf coasts went on strike Tuesday for the first time since 1977. And while Midwest ports are not affected, Chicago and the region will feel the impact.Workers began walking picket lines in a strike over wages and the ports’ use of automation, after an existing contract between the ports and about 45,000 members of the International Longshoremen’s Association expired at 12:01 a.m. Tuesday. The work stoppage could snarl supply chains and cause shortages and higher prices for consumers and businesses if it stretches on for more than a few weeks. Experts say consumers won’t likely notice shortages for at least a few weeks, if the strike lasts that long, though some perishable items such as bananas could disappear from grocery stores. Each year, more than 3.8 million metric tons of bananas arrive at ILA-represented ports, supplying over 75% of the nation’s bananas, according to the American Farm Bureau Federation.Imports and exports will now be routed through West Coast ports. Rail lines that connect to Chicago will shift west and could get backed up now that other routes are out of commission.The greater Chicago area has one of the largest intermodal freight hubs in the U.S. The CenterPoint Intermodal Center, south of Joliet, “will likely see accelerated freight traffic, and even congestion, as goods destined for points East are brought into West Coast ports and re-routed across the U.S.,” said Erin McLaughlin, senior economist with New York think tank The Conference Board.Big companies have already shifted to West Coast ports in anticipation of a potential strike, so supplies won’t be completely disrupted, said Brian Pacula, supply chain expert at West Monroe, a Chicago-based business and technology consulting firm. However, “the prices for inbound logistics will go up,” he said.If transportation is more time-consuming and costly, companies will raise prices for consumers down the road.“It could take two to three weeks to pass along costs," Pacula said. "Unfortunately, customers will likely pay the price and our economy will probably take a hit.” The Conference Board estimated that a one-week strike could cost the economy $3.78 billion and increase the cost of consumer goods, putting pressure on inflation. It's also happening after the Federal Reserve just slashed its key interest rate last month, citing a healthier economy. The 36 affected ports handle 57% of U.S. container volume and a quarter of U.S. annual international trade worth about $3 trillion, according to the organization. Shipping container cranes are visible in the background as members of the International Longshoreman’s Association strike outside the Bayport Container Terminal in Seabrook, Texas.Kirk Sides/Houston Chronicle via AP The strike will have a greater impact on small- and medium-sized businesses that don’t have the large logistical operations of giants such as Walmart and Home Depot. Smaller businesses “may not have a well-oiled supply chain. They are caught in a reactive stance and probably just started to look at this in the past week or two,” Pacula said. Smaller businesses are “at the bottom of the pecking order. As they fight for capacity on containers, they will pay a premium.”Perishables such as fruit and vegetables from South America will be affected first, said Nick Klein, vice president of sales for the Midwest for OEC Group, a facilitator in importing goods globally.“If the strike is over in a day or two, it won’t be a big deal. If it’s more than a couple weeks, it will get ugly,” said Klein , who is based in the Chicago area. Every day the ports are shut down creates a backlog of four to six days, he said. A quick resolution to the strikes seems unlikely, Klein said, especially because automation is a big sticking point in negotiations. A longshoremen with the International Longshoremen’s Association waves to a FedEx truck as he pickets outside of the Dundalk Marine Terminal at the Port of Baltimore in Maryland.Kevin Dietsch/Getty The U.S. Maritime Alliance, the group negotiating for the ports, said both sides did budge from their initial positions. The alliance offered 50% raises over the six-year life of the contract. Comments from the union's leadership had briefly suggested a move to 61.5%, but the union has since signaled that it's sticking with its initial demand for a 77% pay increase over six years.“We have demonstrated a commitment to doing our part to end the completely avoidable ILA strike,” the alliance said Tuesday. The ports' pay offer is more than every other recent union settlement, the group said.The Illinois Farm Bureau declined to comment but said it's monitoring the strike’s impact on farmers.American Farm Bureau Federation President Zippy Duval said in a Tuesday news release: “While there is a risk of shortages of some items, the U.S. is fortunate that it can meet its nutritional needs without importing food. That’s not to say rural America won’t feel the effects of a dockworker strike. Farmers and ranchers rely on international partners to sell billions of dollars of home-grown food to markets around the world. A disruption at the ports could leave perishable food rotting at the docks, which threatens the livelihood of farmers.”Illinois Retail Merchants Association CEO Robb Karr said, “There is a lot of concern for consumers and retailers. We’re concerned the strike will disrupt supply chains again, particularly on the East Coast as it’s trying to recover from Hurricane Helene.”The trade association supported a letter sent on Sept. 17 — signed by dozens of national and state industry associations — that urged President Joe Biden to resolve negotiations with dockworkers and avoid a strike’s “devastating impact on the economy, especially as inflation is on the downward trend.”The strike, coming weeks before a tight presidential election, could also become a factor in the race if shortages begin to affect many voters. Pressure could eventually grow for the Biden administration to intervene to try to force a temporary suspension of the strike.Contributing: AP
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