Supply chain crisis is approaching the United States again, with the threat of dockworkers strike potentially impacting the economy.
Just as US policy makers shift their focus from controlling inflation to supporting the job market, the supply chain faces challenges.
Notice that just as U.S. policymakers are shifting their focus from restraining inflation to supporting the job market, the supply chain is facing disruptions that could lead to widespread supply chain interruptions and consumer dissatisfaction that have been prevalent during the pandemic.
Around 45,000 dock workers in major ports along the U.S. East Coast and Gulf of Mexico are threatening to strike on October 1st. Negotiations have been at a standstill since June, and industry officials now believe that a strike is unavoidable, as ocean shipping companies and port operators have begun warning customers and developing contingency plans.
The trade gateways involved handle more than half of containerized cargo shipments to and from the U.S. A week-long strike is estimated to result in up to $7.5 billion in economic losses. Hundreds of millions of containers of bananas, plywood, and specialized goods like automobiles could be affected, but energy ports will not be impacted.
If the strike does occur, the flow of consumer goods, factory components, and certain vehicles will be disrupted, disrupting the supply chain for automobiles in battleground states and other manufacturing networks. Importation of refrigerated fruits and exportation of fresh meats will face spoilage and diversion, leading to shortages and price increases.
Analysts warn that port congestion could lead to reduced shipping capacity, increased freight costs, and its ripple effects will spread globally.Supervisor Gabriela D'Arrigo stated that, if imports were to stop, "we will leave the West Coast/Los Angeles and then transport by truck," if necessary - indicating the level of chaos that the strike could cause.The spokesperson stated that the union is scheduled to meet on Tuesday to discuss how to handle certain products during the strike, including whether to continue unloading certain goods, but he refused to comment on whether bananas or other fresh fruits are at risk.
The affected foods are not limited to fruits. Frozen beef and pork exports (one of the most profitable foods) are particularly vulnerable.
Some farmers are forced to stop production.
"The protein supply chain cannot stop: the number of young cattle and pigs is still increasing," said Peter Friedmann, executive director of the Agricultural Transportation Alliance. "Frozen products can be stored in refrigerated facilities, but these facilities will quickly be filled up."
When this happens, farmers are forced to push their products onto the domestic market, causing prices to plummet. Friedmann said, "Just as we saw during the previous Covid-19 pandemic, some farmers will simply stop production. They go bankrupt."
President Biden may eventually invoke the Taft-Hartley Act, forcing workers to return to work during a "cooling-off period" - but this may jeopardize the union's support for Harris on election day.
White House officials said last week that the Biden-Harris administration has never invoked the Taft-Hartley Act to prevent a strike and is not considering doing so now.
As for the broader economic impact, Grace Zwemmer of the Oxford Economic Research Institute said that the backlog caused by the week-long strike will take at least four weeks to clear, resulting in losses of $4.5 to $7.5 billion. She expects that once the strike is resolved and the backlog of goods at ports is cleared, these losses will be recouped.
But by then the election will be over.
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