Photo: Paul J. Richards/AFP/Getty Images
A looming dockworkers' strike that's threatening to shut down seaports in the Eastern U.S. could keep some spring merchandise off store shelves, hamper U.S. exports and idle factory production lines.
"Commerce is going to stop, sales are going to be lost and competition will go to foreign suppliers," says Sheila Hewitt, vice president of logistics company Transplace. With the economy still sluggish and Congress at loggerheads over budget cuts that could tip the nation back into recession, "The strike could exacerbate an already delicate situation."
Ports from Maine to Texas would largely close down if the United States Maritime Alliance -- which represents port operators and shipping companies -- can't reach a deal with the International Longshoremen's Association before a contract extension expires at midnight Saturday. A federal mediator on Monday called a meeting with the two sides but has not released any updates.
The dispute largely centers on limits the Maritime Alliance wants to place on container royalties, which are paid to union workers based on cargo weight. The shipping industry says the royalties are tantamount to an annual bonus averaging $15,500 for workers already earning more than $50 an hour. The union, which represents more than 14,500 workers at 14 ports, says the payments offset jobs and hours lost to automation.
On Thursday, Florida Gov. Rick Scott, a Republican, called on President Obama to prevent a walkout, The Florida Times-Union in Jacksonville reported. "Many Florida families are hurting and they simply cannot afford the devastation that a strike would cause," Scott said.
A strike would come just weeks after an eight-day walkout of clerical workers at the ports of Los Angeles and Long Beach that largely shut down those facilities.
The Eastern ports affected handle about 40% of container cargo traffic in the U.S. A strike lasting more than several days could have "an extraordinary impact," says Ed Sands, global practice leader of Procurian, a logistics company.
2002 strike fallout
A 10-day strike that shut down West Coast ports in 2002 cost about $1 billion a day in economic output, and it took six months to clear out shipping backlogs and return to normal, says Jonathan Gold, vice president of the National Retail Federation.
Still, Chris Christopher, an analyst at IHS Global Insight, says the impact of an East Coast walkout could be more limited because the holiday sales season is over and the global economy is tepid, slowing traffic.
Most large retail chains have made contingency plans, Gold says. Some will ship by air or divert imports to West Coast or Canadian ports, while others have already brought in more products.
Such moves, however, sharply increase costs that could be passed to consumers, Gold says. And as detoured products increase congestion on rail lines and at West Coast ports, merchandise from Easter shoes to patio furniture, "might not make it to store shelves" in time for spring sales that begin in February, Gold says.
Most large manufacturers are also channeling exports to other terminals. One plastics maker already is using West Coast ports for its shipments to Asia and South America, but the move is adding $250,000 a week in expenses and six weeks to delivery times, says Robyn Boerstling, director of transportation and infrastructure policy for the National Association of Manufacturers.
Many manufacturers dependent on imports of raw material and components are stocking up on inventory, she says. Still, some production lines could be halted if parts don't arrive in time.
Fruits, vegetables and other perishable exports are supposed to be loaded onto ships even during a strike, says Andrew Walmsley, director of congressional relations for the American Farm Bureau Federation. But he worries that dockworkers won't be able to identify those goods. And meats would not be shipped, possibly prompting foreign customers to switch to alternative suppliers.
"What's the trade impact if we're not a reliable customer?" he says.