The US could see shortages and higher retail prices if a dockworkers strike drags on

AP Business Writer

NEW YORK (AP) — U.S. ports from Maine to Texas shut down this week when the union representing about 45,000 dockworkers went on strike for the first time since 1977.

Workers began walking picket lines early Tuesday near ports all along the East and Gulf coasts.

A shutdown that lasts more than a few weeks has the potential to raise prices and create shortages of goods throughout the country as the holiday shopping season — along with a tight presidential election — approaches.

There have been some signs of movement in the talks, with the U.S. Maritime Alliance, which represents ports and shipping companies, saying that both sides have moved from their initial wage offers. But on Wednesday, the alliance called on the International Longshoremen’s Union to come to the bargaining table. “We cannot agree to preconditions to return to bargaining, but we remain committed to bargaining in good faith,” the group said in a statement.

Late Wednesday night, the ILA said that Harold Daggett, its president, and other union officers, had received death threats since the strike began. The union said the threats were reported to police.

President Joe Biden told reporters Thursday that he thought progress was being made in ending the strike. Asked how much, Biden said “We’ll find out soon.”

What are the issues in the dockworkers strike?

The union is demanding significantly higher wages and a total ban on the automation of cranes, gates and container-moving trucks that are used in the loading or unloading of freight at 36 U.S. ports. Those ports handle roughly half of the nations’ cargo from ships.

The contract between the ILA and the United States Maritime Alliance, which represents the ports, expired Tuesday.

The union’s opening demand was a 77% pay raise over the six-year life of the contract, with Daggett saying that it would make up for inflation and years of small raises. ILA members make a base salary of about $81,000 per year, but some can pull in over $200,000 annually with large amounts of overtime.

On Monday, before workers hit the picket lines, the alliance said it had increased its offer to 50% raises over six years, and it pledged to keep limits on automation in place from the old contract. The alliance also said its offer tripled employer contributions to retirement plans and strengthened health care options.

Which ports are affected?

While any port can handle any type of goods, some ports are specialized to handle goods for a particular industry. The ports affected by the shutdown include Baltimore and Brunswick, Georgia, the top two busiest auto ports; Philadelphia, which gives priority to fruits and vegetables; and New Orleans, which handles coffee, mainly from South America and Southeast Asia, various chemicals from Mexico and North Europe, and wood products from Asia and South America.

Other major ports affected include Boston; New York/New Jersey; Norfolk, Virginia; Wilmington, North Carolina; Charleston, South Carolina; Savannah, Georgia; Tampa, Florida; Mobile, Alabama; and Houston.

Can the government intervene?

If a strike were deemed a danger to U.S. economic health, President Joe Biden could, under the 1947 Taft-Hartley Act, seek a court order for an 80-day cooling-off period. This would suspend the strike.

But during an exchange with reporters on Sunday, Biden said “no” when asked if he planned to intervene.

“Because it’s collective bargaining, I don’t believe in Taft-Hartley,” Biden said.

How are states responding?

Florida Gov. Ron DeSantis said he will order the Florida National Guard and the Florida State Guard to the state’s ports to “maintain order” and possibly help resume operations as residents and business recover from Hurricane Helene.

“This has the potential of really disrupting the hurricane recovery and of hurting the people who were victims of the storm,” DeSantis said at a Thursday news conference.

In addition to sending guard members to ports, DeSantis said his administration will encourage ships to reroute to Florida ports that aren’t affected by the strike and to provide Florida Highway Patrol escorts for commercial vehicles, if requested.

Maryland Gov. Wes Moore, Massachusetts Gov. Maura Healey, New Jersey Gov. Phil Murphy and New York Gov. Kathy Hochul put out a joint statement saying they were monitoring the situation for incidences of price gouging.

“We will continue to closely coordinate to ensure that critical supplies are available at medical facilities and grocers across the country,” the statement said.

How will this affect consumers?

If the strike is resolved within a few weeks, consumers probably wouldn’t notice any significant shortages or price hikes. But a work stoppage that persists for more than a month could be a different story, depending on what you’re shopping for. Most holiday retail goods have already arrived from overseas, so there is a buffer. Prices on everything from fruits and vegetables to cars may head higher, at least temporarily, if it drags on.

That would be unwelcome news after snarled supply chains sent prices jetting higher at the end of the pandemic, and could be potentially damaging politically with Election Day about a month away.

The ‘sell-by’ clock never stops ticking

Container loads of highly perishable bananas are stuck at some ports and Agriculture Secretary Tom Vilsack told reporters Thursday that it will be hard to retrieve them due to the strike. Biden has urged shipping companies in particular to try harder to resolve the dispute, he said.

“That’s the most effective way of getting the bananas to wherever they need to go. And hopefully the shippers will come to the table,” Vilsack said. “The union will come to the table. Collective bargaining will work, and we’ll get this resolved quickly.”

Limiting the duration of this strike is the key to preventing shortages and higher prices, Vilsack said.

“Our assessment is if this lasts a couple of weeks, we’re not talking about a significant disruption,” he said. “If you get into months, then obviously that’s a different situation.”

Businesses are making contingency plans

Since the major supply chain disruption in 2021, 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.

Still, housing those goods for longer can have an inflationary impact at the register because retailers will need to recoup those storage costs, or absorb them.

Jay Foreman, CEO of Basic Fun, a Boca Raton, Florida, the maker of Care Bears and Lincoln Logs, has already shifted all of the toy company’s container shipments away from the East Coast to West Coast ports, primarily Los Angeles and Long Beach. That too, comes with a cost.

The maneuver added anywhere from 10% to 20% in extra costs that his company will have to absorb because Basic Fun’s prices for the next 10 months are locked in with retailers. But Foreman would consider raising prices during the second half of 2025 if the strike is prolonged.

Daniel Vasquez, who owns the import, export specialty company Dynamic Auto Movers in Miami, increased inventory, specifically for vehicles that take longer to ship, in anticipation of a strike.

He too stopped relying on one port or shipping partner and has expanded his relationship with smaller ports and shipping companies that can bypass congested areas.

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 already facing challenges from Houthi attacks on commercial shipping that have essentially shut down the use of the Red Sea and Suez Canal.

Rising uncertainty over the supply chain arrives 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 goods to U.S. distribution centers in June, and Gold said that the majority of those products are already in the U.S.

Yet on top of the cost of storing goods for longer, retailers will have a hard time replenishing their inventory should the strike drag on, and as Gold pointed out, carriers are already announcing surcharges on shipped containers due to potential disruptions.

Toy companies had ready diverted many shipments through Los Angeles in anticipation of a strike and inventories at stores are right now are healthy, said Greg Ahearn who leads The Toy Association, the nation’s leading toy trade group. He said Wednesday that the strike becomes more problematic with time, specifically in satisfying demand for popular toys as Christmas approaches.

As much as 60% of annual sales for toy companies occur during the current quarter, Ahearn said.

“The longer this goes on, the higher probability that toys that parents and caregivers want for their children will be scarce and with scarcity comes the potential for higher prices,” he said

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AP Writers Brendan Farrington in Tallahassee, Florida; Stephen Groves in Dover, Delaware; Anthony Izaguirre in Albany, New York; Tom Krisher in Detroit; and Colleen Long in Washington contributed to this report.