As the strike by the International Longshoremen’s Association (ILA) enters its second day, economists are beginning to put a price tag on it – and it’s a hefty one.
The Conference Board projects that the strike against East Coast and Gulf Coast ports will cost the U.S. economy $540 million. If the strike lasts just a week, the price will be a total of $3.78 billion.
The Conference Board analysis notes the 36 ports handle 57% of the container volume coming in and out of the U.S. Together, these facilities from Maine to Houston handle a quarter of U.S. annual international trade – about $3 trillion. Electronics and automobiles are the most affected products.
The strike comes just a little more than a month before election day and could possibly have some impact on voters’ decisions. It also comes as retailers scramble to finish importing inventory to ensure customers are well supplied ahead of the busy holiday shopping season.
‘No easy Plan B’
"There's no easy Plan B.,” said Erin McLaughlin, senior economist at The Conference Board. “While shippers have already begun diverting some cargo to the West Coast, capacity for such alternative options is limited."
According to The Conference Board analysis, the impact of the strike will expand with each passing day. Even a short port strike could cause supply chain interruptions for weeks. For example, a one-week strike that started Oct. 1 could cause slowdowns through mid-November.
As early as July 2023, the union telegraphed its intention to strike if its demands were not met. According to ILA officials, there are two main issues.
The ILA is demanding a pay increase of 70% over six years. While that sounds like a lot, union officials point out East and Gulf Coast port workers are now earning notably less than what their West Coast counterpoints secured in renegotiations last year.
The union also wants to block the expansion of automation at the ports. The ILA said terminal operators have been found using autonomous systems to process trucks without ILA labor, they say violates the current contract.
While the strike is resulting in lost sales, it is also likely to result in shortages and higher prices for consumers. Perishable food, such as fish, beef and produce may be harder to find in some areas. If there are shortages, consumers can expect higher prices.