Tens of thousands of dockworkers are on strike, potentially affecting the year-end sales season. The strike began after the International Longshoremen’s Association and the American Maritime Alliance failed to agree on a new labor contract.
What happened: The strike closed 36 ports along the East and Gulf Coasts, which handle nearly half of all U.S. ocean imports. This could cost the economy $540 million a day, according to an analysis by the Conference Board, Business Insider reported Tuesday.
The union is demanding a 77% pay rise over six years, in line with inflation. According to CBS News, the country will still be below many countries on the West Coast in this demand.
The timing is critical, with the U.S. presidential election just a month away and the holiday season fast approaching. The strike follows Hurricane Helen, which caused significant damage to the Southeast and disrupted supply chains.
While major retailers such as Wal-Mart’s WMT and Home Depot HD are bracing for such disruption, small and medium-sized businesses may face significant challenges.
“Fortune 100 companies, even Walmart and home improvement stores, are probably fine,” Pacula said.
“They generally have very mature supply chains,” says Brian Pacula, a supply chain partner at West Monroe Consulting.
Michael Yamartino, CEO of Root, said rerouting shipments to the West Coast would be costly and time-consuming and would impact small and medium-sized businesses that rely on European suppliers. .
“The automotive industry is high on that list,” Yamartino added.
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President Joe Biden has said he has no plans to intervene, despite calls from industry groups. However, if the strike continues, federal intervention may be needed to prevent further economic damage.
Why it matters: The impact of the strike extends beyond the immediate closure of the port. Major companies such as Amazon.com AMZN, Apple, AAPL, and Tesla TSLA are bracing for significant disruption. These companies rely heavily on East Coast ports for consumer electronics and inventory, and delays could have a major impact on their operations, especially as the holiday season approaches.
The strike, which began on October 1, could disrupt the supply of billions of dollars worth of goods and complicate the holiday season. The New York Times reported that the last time the International Longshoremen’s Association organized a strike of this scale was in 1977. Recent labor victories by major unions such as the Teamsters and the United Auto Workers (UAW) set a high bar and have great significance for longshoremen. Use it in negotiations.
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