An Eastern Port Strike Is the Economic Shock No One Wants to See

Unless Monday brings a surprise, Tuesday will see the International Longshoremen’s Association go on strike for the first time since 1977. And there will likely be significant consequences.

“We should probably expect there to be a work stoppage and we shouldn’t get surprised if there is one,” Georgia Ports Authority CEO Griff Lynch told The Associated Press. “The question is: How long?”

A strike would shut down 36 ports that handle about half of the cargo volume that travels by ship. Union members want more money but more critically an end to automation.

“This is not just about money; this is about future automation replacing a large majority of jobs within the ports and that reality is valid, it will eventually happen,” Tracey Ortiz, director of product management at SPS Commerce, tells GlobeSt.com. Right now, there isn’t enough automation to keep the ports running “even for a day or two,” according to Ortiz.

“Several ports have already scheduled planned shutdowns of all port operations ahead of the potential strike from the afternoon of September 30 — the Port of Houston, Port of New Orleans; Port of Norfolk; Port of Mobile,” says Mirko Woitzik, global director of intelligence for Everstream Analytics. More are likely to announce closures.

“Retailers rely on this period to stock up on goods for holiday shopping, and the strike could lead to shipment delays and shortages, resulting in empty shelves and higher prices for consumers,” Nari Viswanathan, senior director of supply chain strategy at Coupa, tells GlobeSt.com.

Everstream Analytics data suggests that it takes seven days to clear one day of a strike. A week of a strike would push delays into mid-November. Shipping companies could redirect traffic to Caribbean transshipment hubs or even gateways in Mexico or Canada that enable rail or truck transit. But it would add transit time and slow deliveries.

“Retailers might also face increased costs as they seek alternative shipping routes or expedite shipments to meet demand,” Viswanathan added. “Prolonged disruption at these ports would strain the supply chain, leading to economic losses for businesses and potential job losses for workers dependent on these operations. The broader economy could also suffer from reduced trade efficiency and increased costs.” Experts say the negotiations could reframe the entire shipping industry and its relationships with labor going forward.

As Carol Ng told GlobeSt.com recently, there is a lot of volatility in markets and unexpected outcomes could have a serious effect on the economy. The question is whether a strike might be an event that could tip conditions.

There are also potential impacts on commercial real estate. Lynn McKee, commercial real estate director at Georgia State University’s Robinson College of Business, tells GlobeSt.com that the strike could hurt CRE.

“The halt of imported goods in the US will quickly impact the logistics system including massive logistics facilities,” she says. The popularity of just-in-time scheduling leaves logistics operations at risk of significant disruption because they have little to no slack that can act as a buffer.

CRE warehousing and logistics properties also face strain on outgoing shipments, because strikes won’t only affect incoming ones. “Products will pile up in warehouse properties,” says McKee. “The severity of this will depend on the length of the strike and the ability of companies to work around the East Coast ports to alternative ways to bring goods into and out of the country.”