Historic Dockworker Strike Threatens Major Disruptions Across US Ports: Supermarket Supply Chains at Risk
In a landmark event, approximately 45,000 dockworkers went on strike this Tuesday for the first time in nearly five decades. The strike, which could temporarily put up to 105,000 other workers out of work, has affected 36 key ports along the East and Gulf Coasts, stretching from Maine to Texas. This significant disruption follows a breakdown in talks between the International Longshoremen’s Association (ILA), North America’s largest maritime union, and the U.S. Maritime Alliance (USMX), which represents employers in the longshore industry.
Potential Consequences for Global Trade and Supply Chains
This strike has the potential to rival the supply chain chaos witnessed during the COVID-19 pandemic. Ryan Peterson, CEO of logistics company Flexport, warned that if the strike lasts more than a few days, the effects will quickly spread across global trade. With around 15% of the world’s container ships affected, the ripple effect on supply chains could be massive.
If the strike extends for a prolonged period, the delays could cause shortages and price increases across various industries, from manufacturing to retail. However, one sector that is especially vulnerable is the supermarket industry.
The Core Issue: Wage Disputes
At the centre of the conflict is a demand for higher wages. The ILA is pushing for a substantial pay rise, stating that their members are underpaid given the current inflationary pressures. Johnnie Dixon, president of the ILA’s Fort Lauderdale branch, noted that the highest-paid union members earn $39 an hour, and the union is seeking a 77% pay increase over the next seven years to address rising living costs.
In response, the USMX filed an Unfair Labour Practice complaint last week, seeking to prevent the strike and force the union to continue negotiations. A final offer made by USMX earlier this week was swiftly rejected by the ILA, which described the wage proposal as “unacceptable.”
Supermarket Supply Chains: What’s at Risk?
The supermarket sector is likely to be hit hard by the strike, with both imports and exports of food products facing significant disruption. According to ILA President Harold Daggett, a coast-wide strike could severely damage the U.S. economy, with the majority of food items sold in the country arriving by sea.
Particularly at risk are non-perishable food products imported from Central and South America, including staples like bananas, fresh vegetables, and canned goods. According to the American Farm Bureau Federation (AFBF), 75% of bananas consumed in the U.S. pass through ILA-managed ports, alongside 90% of cherries, 82% of hot peppers, and 85% of canned foods. A backlog at the ports could quickly lead to shortages on supermarket shelves, particularly of these key items.
On the export side, the impact could be equally devastating. Major agricultural products such as poultry, cotton, red meat, dairy, and soybeans are all heavily reliant on U.S. ports for international trade. The AFBF has warned that delays in exports could lead to an oversupply of goods domestically, driving prices down for U.S. farmers while increasing costs for consumers due to import shortages.
Beyond Food: Broader Economic Concerns
While the impact on food supply chains is of particular concern, the effects of the strike are expected to reverberate across multiple industries. Nearly 180 trade associations, representing sectors ranging from automotive to retail, have expressed grave concerns about the long-term economic damage the strike could cause. A letter from these groups to President Biden earlier this month outlined fears of widespread product shortages and price hikes.
The estimated financial toll of the strike is staggering, with some experts suggesting it could cost the U.S. economy between $540 million and $5 billion each day, depending on how long it continues. For supermarkets, the knock-on effect could be similar to the shortages and rising prices seen in the immediate aftermath of the pandemic, with shelves going empty for key items, particularly fresh produce.
A Protracted Recovery for Supermarkets
Even if the strike ends within days, the effects will likely last weeks or even months. According to shipping advisory firm Sea-Intelligence, a one-day strike could result in a backlog that would take four to six days to clear. If the strike lasts a week, the recovery period could stretch well beyond a month. For supermarkets, this would mean sustained gaps in inventory, leading to potential disruptions in availability and prices.
In the short term, consumers may not immediately notice the impact, but if the strike extends, food prices could begin to rise, particularly for items that are heavily reliant on import routes through affected ports. Supermarkets will need to prepare for potential shortages, particularly of perishable goods, and could be forced to source alternative suppliers to mitigate the disruptions.
The ongoing dockworker strike threatens to disrupt not only the global supply chain but also the essential food supply that supermarkets depend on. As this labour dispute continues to unfold, the ability of supermarkets to stock key products may be severely impacted, leading to potential price hikes and shortages for consumers. With negotiations at a standstill, and no immediate resolution in sight, the strike could become one of the most significant challenges for the U.S. supply chain since the pandemic, with far-reaching consequences for supermarkets and consumers alike.