What a prolonged U.S. port strike means for global supply chains | Real Time Headlines

one Massive dockworkers strike Strikes at U.S. eastern and Gulf Coast seaports are expected to wreak havoc on global supply chains and the economy, and U.S. consumers could notice shortages of popular products if the shutdowns last long.

Earlier Tuesday, port workers from Maine to Texas went on strike over wages and automation. The action, which could have serious consequences for ships carrying billions of dollars of cargo, is the first by the International Longshoremen’s Association (ILA) union in nearly half a century.

The ILA, which represents some 45,000 port workers, followed through on its threat to strike at 14 major ports after talks with the United States Maritime Alliance (USMX) employer group collapsed ahead of a September 30 deadline.

“The bottom line is, the duration amplifies the impact,” Lisa DeNight, managing director of national industrial research at Newmark, told CNBC’s “The Exchange” on Monday.

“I would say that if this strike lasts for a few days, the impact is quite short-lived. If this continues, it will have a knock-on effect on the entire global economy, not just the U.S. economy. So, the issue is not Predictability does play a role and the severity does have a huge impact on global supply chains,” she added.

DeKnight said even a minor disruption of just a few days could have a “really significant impact on certain industries,” including pharmaceuticals, automotive and manufacturing.

Marine supply chains have been hit hard this year red sea conflictEffects of long-term drought panama canal and Baltimore bridge collapse.

Even so, Peter Sand, chief analyst at ocean freight rate intelligence platform Xeneta, said explain Given that more than 40% of “containerized cargo” enters the United States through Eastern and Gulf Coast ports, “the risks could not be higher.”

Sander told CNBC’s “Signpost Europe” on Tuesday that he expected the strike to last a week.

“We’re seeing the dominoes fall in multiple stages right now. Of course, first of all, the immediate impact is on the eastern United States and the Gulf Coast, right?” Shah said.

He added that this would have a knock-on effect on ships currently queuing outside ports, meaning their next journey to the United States with new cargo would be delayed.

“We will see disruptions to the timing of some ships leaving Europe and the Mediterranean in late October and early November,” Sander said.

The ships will be delayed from leaving Asia in late December and early January, “which is basically when the next normal small peak in container traffic occurs before the Lunar New Year.”

“So, it’s really a critical time right now and a lot of things are at stake. You might say it’s a perfect storm, but it’s also a very good negotiating position for those who want to strike,” Santos said. De said.

For U.S. consumers, strikes could quickly lead to shortages of perishable or temperature-controlled goods such as bananas and other fresh fruit, he said.

danish shipping giant Maersk have warn A one-week shutdown alone could take four to six weeks to recover, “with massive backlogs and delays growing by the day.”

In update publish Maersk said on Monday the disruption could lead to delays in cargo shipments, increased costs and logistical challenges for companies relying on U.S. East Coast and Gulf ports. The company added that these disruptions could be exacerbated by a protracted labor dispute.

However, not everyone is worried about the broader economic impact of the U.S. port strikes.

Bradley Saunders, North America Economist at Capital Economics, explain A research note published late last month said strike action was unlikely to trigger any major economic disruption because, despite early denials, US President Joe Biden had “no choice” but to intervene early and invoke back-to-work legislation11 election of the month.

Biden has said he will not use existing labor laws to force union workers back to work, which is within his authority under the Taft-Hartley Act.

The Taft-Hartley Act, passed in 1947, was an amendment to U.S. laws governing labor relations and union activity that gave the U.S. president the “cool” to suspend strikes for 80 days in cases of “national health or safety.” period” power. “There is danger.

Sanders said on September 25: “The supply chain has been subject to frequent shocks in recent years, making producers more adaptable to the risk of insufficient inventory.”

He added: “It is therefore likely that companies will take precautions in the event of a strike, especially since the ILO has been promoting this possibility for months.”

—CNBC’s Lori Ann LaRocco contributed to this report.