HOUSTON — U.S. ports from Maine to Texas shut down Tuesday when the union representing about 45,000 dockworkers went on strike for the first time since 1977.
A lengthy shutdown could raise prices on goods around the country and potentially cause shortages and price increases at big and small retailers alike as the holiday shopping season — along with a tight presidential election — approaches.
“First and foremost, we can expect delays to market. And those delays depend on really what the commodities are and priorities at the ports and how quickly things move,” said Mark Baxa, president of the Council of Supply Chain Management Professionals.
What you need to know
- The strike began at 12:01 a.m. Tuesday
- The strike involves about 45,000 members of the International Longshoremen’s Association
- The strike affects 36 ports from Maine to Texas. They are represented by the U.S. Maritime Alliance
- The union’s opening offer in negotiations was for a 77% pay raise over six years. Members make a base salary of about $81,000 per year
- The union wants a complete ban on automation
- The two sides had not held formal negotiations since June
What products are affected by the port strike?
The strike could last weeks — or months. If the strike is resolved within a few weeks, consumers probably wouldn’t notice any major shortages of retail goods.
However, a strike that persists for more than a month would likely cause a shortage of some consumer products, although most holiday retail goods have already arrived from overseas.
University of Houston supply chain and logistics technology program director Margaret Kidd said she doesn't expect prices of goods to rise quickly.
"When we consider fresh fruits and vegetables, which are perishable and we're dependent on in South and Central America, if we have an extended strike, it could impact what we pay at the grocery store. Not going to impact it tomorrow, but it could within a couple of weeks," Kidd said. "Good news is most of the retailers anticipated this, they frontloaded cargo to arrive prior to peak season."
Kidd said you don't need to stock up on groceries and she expects President Joe Biden to get involved if a deal isn't reached closer to the election. She said there's no need to horde perishable groceries like fruits and vegetables.
"The reality is that while the two parties are far apart, at some point, the president will have to intervene because of the danger to the overall US economy. This strike is going to impact other countries, too," Kidd said.
Fruits and vegetables
According to CNN, while holiday goods can sit in warehouses for months at a time, that is not the case with perishable items like fruits and vegetables.
One fruit – bananas – is likely to be affected by the strike since virtually all bananas eaten in the U.S. are imported. According to the American Farm Bureau, 25% of bananas brought into the U.S. come through Port Wilmington in Delaware.
Chocolate and meats
CNN also reported that specialty food items like imported chocolate and meats could potentially end up in short supply, according to Danny Munch, an economist American Farm Bureau.
Imported raw products like cocoa and sugar could also be affected. It might not affect the coming holidays but could be an issue for Valentine’s Day.
The American Farm Bureau told CNN that nearly 100 percent of cocoa beans are imported.
Beer, liquor and wine
Drink up while you can as beer, liquor and wine imported could be affected by the strike, according to CNN. This could include German beer, French wine, Scotch and Irish whiskey, or rum and tequila.
“We’re leaning into the big selling time of the year for spirits, leading into the holidays. Even a day strike could have significant repercussions,” Chris Swonger, CEO of the Distilled Spirits Council, told CNN.
Munch said that 70 percent of win imports come through these ports.
"Over $5 billion of wine comes through those ports every year, 70 percent of our wine imports, most our wine and whiskey imports, some of our roasted coffee," Munch said.
Swonger said consumers could see an impact within a month.
Retailers are making contingency plans
Since the major supply chain disruption in 2021 caused by pandemic bottlenecks, retailers have adapted to supply chain disrupters being “the new norm,” said Rick Haase, owner of a mini-chain of Patina gift shops in and around the Twin Cities in Minnesota.
“The best approach for Patina has been to secure orders early and have the goods in our warehouse and back rooms to ensure we are in stock on key goods,” Haase said.
Daniel Vasquez, who owns Dynamic Auto Movers in Miami, which specializes in importing and exporting vehicles, increased inventory, specifically for vehicles that take longer to ship, in anticipation of a strike.
He has also stopped relying on one port or shipping partner and has expanded his relationship with smaller ports and shipping companies that can bypass congested areas.
“This move provides us with an edge — having backup partners in place means we can reroute shipments efficiently if the strike hits hard,” Vasquez said.
How will a strike affect holiday shopping?
Jonathan Gold, vice president of the supply chain and customs policy at the National Retail Federation, the nation’s largest retail trade group, said the strike arrives with the supply network continuing to face challenges from Houthi attacks on commercial shipping that have essentially shut down the use of the Red Sea and Suez Canal.
The uncertainty over the supply chain is taking place at the peak of the holiday shipping season for retailers, which traditionally runs from July through early November. Many big retailers, anticipating a strike, started shipping their goods to U.S. distribution centers in June, and Gold said that the majority of products ordered are already in the U.S.
But retailers will have a hard time replenishing items and are incurring extra warehouse costs to store goods longer. Gold also noted that carriers are already announcing surcharges on containers to address potential disruptions.
The Toy Association, the nation’s leading toy trade group, was one of roughly 200 trade groups that sent a joint letter to President Biden earlier this month urging the administration to work with ILA and USMX to come up with a contract. Greg Ahearn, its president and CEO, noted that a strike would happen at an extremely critical time for toy sellers and makers — up to 60% of a toy company’s annual sales come during the fourth quarter.
The holiday shipping window for the toy industry is anywhere from six to eight weeks and started in July, though some toy companies tried to ship earlier or add more toys to shipments, Ahearn said.
“It hits many ways,” he said. “From a consumer perspective, it starts with delays in availability and then starts to surface as product shortages within toys. At retail for the toy industry, it results in potentially higher prices based on scarcity and increased costs.”