By Anna Nagurney
Getting any product to consumers, whether it’s a can of sardines or a screwdriver, requires that supply chains function well.
The availability of labor is essential in each link of the supply chain. That includes the workers who make sure that your tinned fish and handy tools smoothly journey from their point of origin to where they’ll wind up, whether it’s a supermarket, hardware store or your front door.
Amazingly, 90% of all internationally traded products are carried by ships at some point. At the height of the COVID-19 pandemic, it was hard not to notice the supply chain disruptions. For U.S. ports, there were many bouts of congestion. Demand for goods that were either more or less popular than they would normally be became volatile. Shortages of truckers and other freight service providers wreaked havoc on land-based and maritime transportation networks.
Consumers became exasperated when they saw all the empty shelves. They endured price spikes for items that were suddenly scarce, such as hand sanitizer, computer equipment and bleach.
I’m a scholar of supply chain management who belongs to a research group that studies ways to make supply chains better able to withstand disruptions. Based on that research, plus what I learned while writing a book about labor and supply chains, I’m concerned about the turmoil that could be in store for cargo arriving on ships.
Concerns over pay and technology
The International Longshoremen’s Association’s six-year contract with the East Coast and Gulf Coast ports expired on Sept. 30, 2024, at midnight without an agreement. About 45,000 dockworkers are now on a strike that has paralyzed ports from Maine to Texas. Only military cargo and cruise ships, as well as oil, gas and liquid chemicals, can go in and out.
It’s the first such work stoppage for the East Coast ports since 1977.
Labor and management disagree over how much to raise wages, and the union also wants to see strict limits on the use of automation for cranes, gates and trucks at the ports in the new contract. The union is seeking a 77% increase in pay over the next six years and is concerned that jobs may be lost because of automation. When management offered a nearly 50% raise, the union rejected it.
Dockworkers on the West Coast, who are not on strike, are paid much higher regular wages than their East Coast and Gulf Coast counterparts who are on strike. The West Coast workers earn at least an estimated US$116,000 per year, for a 40-hour work week, versus the roughly $81,000 dockworkers at the East Coast and Gulf Coast ports take home, not counting overtime pay.
Management is represented in the talks by the U.S. Maritime Association, which includes the major shippers, terminal operators and port authorities.
What to expect
Starting on Oct. 1, 36 ports, including those in Philadelphia and Houston, ceased operations due to the strike, blocking almost half of the cargo going in and out of the U.S. on ships.
If the strike lasts just a day, then it would not be noticeable to a typical consumer. However, businesses of all kinds would no doubt feel the pinch. J.P. Morgan estimates that a strike could cost the U.S. economy $5 billion every day.
Even if the strike were to last only a day, it could take about five days to straighten out the supply chain.
If a strike lasts a week, the results would quickly become apparent to most consumers.
Some shipping companies have already begun to reroute their cargo to the West Coast. Even had there been no strike at all, costs would have risen and the warehouses could have run out of room.
The effects on everything from bananas and cherries to chocolate, meat, fish and cheese could be severe, and the shipping disruption could also hamper trade in some prescription drugs if the strike lasts at least a week.
If the strike were to last a month or more, supplies needed by factories could be in short supply. Numerous consumer products would not be delivered. Workers would be laid off. U.S. exports, including agricultural ones, might get stuck rather than shipped to their destinations. Inflation might increase again. And there would be a new bout of heightened economic anxiety and uncertainty – along with immense financial losses.
All the while, West Coast ports would face unusually high demand for their services, wreaking havoc on shipping there too.
Yes, we’d have no bananas
My research group’s latest work on supply chain disruptions and the effects of various transportation disruptions, including delays, quantifies the impact on the quality of fresh produce. We did a case study on bananas.
This isn’t a niche problem.
Bananas are the most-consumed fresh fruit in the U.S.
Many of the bananas sold in the U.S. are grown in Ecuador, Guatemala and Costa Rica. About 75% of them arrive at ports on the East and Gulf coasts.
David Diaz/picture alliance via Getty Images
Although bananas are relatively easy to ship, they require appropriate temperatures and humidity. Even under the best conditions, their quality deteriorates. Long delays will mean shippers will be trying to foist mushy brown bananas on consumers who might reject them.
Alternatively, banana growers may opt to find other markets. It’s reasonable to expect to find fewer bananas and much higher prices – possibly of a lower quality. Flying bananas to the U.S. would be too expensive to sustain.
Fresh meat, seafood, cheese and other refrigerated foods could spoil before they can complete their journeys, and fresh berries, along with other fruits and vegetables, could perish before reaching their destinations.
Tons of fresh produce, including bananas arriving after Oct. 1, could end up having to be discarded. That is unfortunate, given the rising food insecurity rate in the U.S.
1947 Taft-Hartley Act
More than 170 trade groups had urged the Biden administration to intervene at the last minute to avoid a strike.
Even now, the government can invoke the 1947 Taft-Hartley Act, which allows the president to ask a court to order an 80-day cooling-off period when public health or safety is at risk.
However, President Joe Biden reportedly does not plan to invoke it. Instead, he has urged the two sides to settle their differences.
So if you’re planning to bake banana bread or were thinking you might get an early start on your holiday shopping, I’d advise you to make those shopping trips as soon as possible – just in case.
Anna Nagurney is Professor and Eugene M. Isenberg Chair in Integrative Studies at UMass Amherst.
Laurel says
A 77% increase in pay on an $81+k job, not counting overtime? This action causing problems for consumers, farmers, distributors and sellers?
If they think their job is unfair, get another job.
Go automated.
Deborah Coffey says
77% over 6 years and there’s this from USA Today:
The ILA contract that expired on Monday shows that the starting pay for dockworkers was $20 per hour. Pay rises to $24.75 after two years, $31.90 after three and tops out at $39 for workers with at least six years on the job.
Laurel says
The dock workers turned down a 50% increase. How many people get anything close to that? Most folks get an increase that barely keeps up with inflation.
Don’t you figure the timing of this a bit interesting?
Joe D says
I’m all for workers’ rights and supporting worker’s rights to unionize.
However demanding a 77% raise over 5 years (the companies have already offered a 50% raise)…the average salary now is approximately $39/ hour?!? The MOST raise I ever got in my 43 year NURSING career was 4%!! There was 1 year it bumped 8 percent, because they READJUSTED the entire Nursing pay scale because they could no longer trade on the hospital’s NAME alone, to attract qualified nurses. And there were significant retention bonuses during Covid, but I retired from the stress in 2020.
I also understand they don’t want to lose jobs to automation, but EVERY industry (automakers, food processing etc) has had to deal with that. Most companies offer retraining, and retention of CURRENT employees (no automation lay offs).
I’m sorry, the unions are using the argument that the (all NON US owned ) companies have made record profits over the last few years, and they can “afford” these pay demands. THATS their argument??? I would LOVE the 50% increase the companies are offering now!
Unfortunately if the President forced the workers back to work, pending a new contract, they would just stage a “work slow down”….instead of 30 loads an hour, the workers would do 8 loads an hour….but the companies would have to pay them their full current $39/ hour salary.
Unfortunately who are going to suffer the most are the American consumer, and American businesses who either rely on EXPORT shipping, or companies that need foreign PARTS to keep their factories running.
My father was a Union Member, I was a Union member, my wife and daughter were Teachers Union members…but this strike seems more about GREED….and really on both sides, with the average US family caught in the middle!
I hope it can be resolved quickly!
richard santomassino says
Thanks for all your years as a nurse. I worked as a RN in Orlando but eventually tired of hospitals (Advent) bad attitude and lack of respect for nurses. Spent 17 years working in the Medical research industry- WOW, what a difference
Alex says
Wouldn’t everyone love a 77 per cent increase in pay. I think their reaching for the stars and in the meantime going to cause price gauging for the rest of the people in our country.
Atwp says
We will see what happens later. Is this a political stunt by Trump, probably not, with his thinking nothing would surprise me about him. Short supply equals higher prices. This is not good timing for the Dems. Pretty sure Trump will blame the Dems, and they will keep their mouths shut, as some think Trump is a god.
Wtf says
Whole world is falling apart under a Democrat run system, and you are blaming Trump??? You sir, are a complete idiot…
Atwp says
Wtf I didn’t blame Trump. Read the second sentence. You are the idiot, I am a very mature African Man.
Sherry says
wtf. . . please provide “credible facts” for your ridiculous claims and make sure what is happening in the world actually is under the “DIRECT control” of the Biden administration. Otherwise, we will all understand that you are capable only of posting BS Fox talking points. Thanks.
Laurel says
Wtf: The world is not falling apart, unless you want to believe, and vote for Debbie Downer Trump, and the Republicans ARE trying to blame Biden and Harris…of course.
Dennis C Rathsam says
Yall have Trump derangement disease! The man hasnt been president in 4 years, yet you blame him for everything! Instead of looking to the president & his VP. The world is on fire! The Middle East, The floods in the south, the border mess,& now a strike at the ports. Bidens was at the beach, & Harris was hawking money in San Fransico. Trump took supplies, water food & gasoline to help the victems of this disaster. Problem is they all knew it was comming, Biden & Harris did nothing to send help before the flood. How many days did it take them to get there in person? Now all these people will look to FEMA for help, but it looks like theres not much money left, since Biden & Harris gave it all to the invaders! What will they say to the American people looking for a hand up? As for the strike… Biden & Harris knew this was comming too. Did they send in folks to try to stop it? This is one failure after another… From Afganistan, to the current mess here and abroad. America is dying for a leader, one who takes questions, and answers them, not word salad.With every promise you here, with every lie they tell… Ask yourselfs, as the US debt continues to rise… Wheres the money comming from to pay for these pie in the sky ideas?
Atwp says
Dennis, can you prove your comment? Are you like Trump, just lie because you don’t know the truth. America has a leader, it is dying from Trump’s stupidity. If you think Trump is such a good person, why dosent he help people who are in prison because of him? A lot of Trump blind followers need mental help like he does.
Laurel says
Yes, Dennis, Trump is deranged. He is the very king of world salads, do you ever really listen to him? Are you telling me, that when he talks, he makes sense? Trump throws paper towels at people in need. No one, but no one, knew that North Carolina would be hit the way it was. They have no history of such an event.
You really, really, really, really, really need to change the channel. Reading your comment is a head shaking event.
Laurel says
Atwp: You got it! People are already starting to stock up on toilet paper. The timing it just too coincidental.
Mothersworry says
We could go back and forth with the pro’s and con’s of unions. Some bemoan the position that union’s are asking for too much. Seems they are about 20% apart for a seven year contract. Anybody would split the difference and settle, there seems to be more than is being told imo.
Nobody has mentioned that the management take a cut in pay to offset the raise increase, nobody on the board of directors is taking a hit in the wallet. They just keep on stuffing money into their pockets. Curious how their wage is based.
Invoking Taft Hartly spells doom for the workers. Why should the companies negotiate when they see a legislated settlement down the road. Couple that with people complaining about the unions and the stacked courts it should be allowed to play out.