Can the Dockworkers Strike Disrupt the Fragile US Supply Chain?
Concerns about shortages of everything from food to automotive parts increase as strike shows no early sign of ending.
At a Glance
- Dockworkers are striking for higher wages and fears of automation taking away their jobs.
- There are already concerns over prolonged waits for supplies, higher prices, and hoarding by alarmed consumers.
The nightmarish supply-chain issues and shortages of many products during the COVID-19 pandemic are not far removed in the minds of many, but those bad memories could be rapidly replaced by the effects of a dockworkers strike at many Atlantic and Gulf Coast cargo facilities.
The walkout, which began Tuesday, could potentially cripple overseas shipments of food, vehicles and vehicle parts, tools, furniture, electronics, and other goods as they are stuck on ships at the affected ports. The fallout would be almost immediate as supermarket shelves start to run out of goods, likely exacerbated by panicked consumers hoarding items, as well as raise already inflated prices. A prolonged walkout could also threaten the availability of many consumer goods for the busy holiday shopping season, just a month away.
The site Visual Capitalist recently compiled a list of companies that could be the most vulnerable to a port shutdown. The list is a who’s who of companies the U.S. shops at and buys goods from, including Walmart, IKEA, Samsung, LG, Home Depot, Hyundai, General Motors, Amazon, among others. The list is based on the 20-foot equivalent units imported between September 2023 to September 2024.
Company | TEUs Imported at East and Gulf Coast Ports Sep 2023-Sep 2024 |
Walmart | 47.7K |
IKEA | 42.9K |
Samsung | 33.8K |
Bob's Discount Furniture | 26.5K |
LG | 24.1K |
Home Depot | 21.2K |
Continental Tire | 15.7K |
Hyundai | 13.7K |
Dollar General | 11.0K |
General Motors | 10.5K |
Source: Visual Capitalist
According to market data, ocean shipping is the most common way to transport goods globally, accounting for over 80% of the volume of international trade. An estimated 90% of traded goods is transported by sea.
Fear of Automation
Dockworkers play an essential role at shipping ports to load and unload cargo, with the help of heavy lifting equipment such as cranes. But shipping companies, trying to cut costs and increase efficiencies, are increasingly eyeing the use of robots to help automate port handling duties─which the dockworkers perceive as a direct threat to their livelihood.
The dock workers’ concerns were front and center in news reports, where workers clearly stated automation was their top concern. A CBS News video noted automation has already eliminated jobs in the Los Angeles area ports.
A recent CNN report noted that automated cargo handling is far more prevalent at ports in locales such as the Far East. The article said the longshoremen’s union is demanding a $5-an-hour increase in pay in each of the six years over the next contract and written provisions that the ports won’t introduce automation “or semi-automation.”
The same article quoted a McKinsey report as stating that automated ports have so far not necessarily proven to be more productive than their automated counterparts, though it also stated careful planning and implementation can achieve greater efficiencies.
Sympathy for Dockworkers?
While the loss of potential jobs should arouse concern, dockworkers might not get sympathy from other segments of the population, particularly if the strike is prolonged and the potential shortages and higher prices of goods do materialize. A CBS report noted that under the contract that just expired, dockworkers start at $20 per hour, rising to $24.75 hourly after two years and $31.90 after three, topping at $39 after six years of service. But the report added that taking on additional shifts can propel earnings over $100,000 annually.
A number of comments underneath the CBS news video were unsympathetic to the dockworkers’ plight, stating that automation is inevitable, and one comment warned that if the workers gained the concessions they are targeting, the costs would be passed onto the consumer in the form of higher prices on goods passing through ports.
Effects Could Be Devastating
Fears about higher prices and shortages have already caused some consumers to start hoarding items at warehouse outlets such as Costco, according to some reports, with items such as toilet paper and towels already in short supply. But the main concerns logistics providers now revolve around dealing with port transactions and the potential to disrupt deliveries towards the busy holiday season. according to reports from the logistics site xChange.
A customer advisory from the site, quoting industry insiders, delved into some of the problems already being encountered and anticipated.
James Langley, from Container Solutions & Designs, LLC, emphasized the difficulties faced at depots during the strike. “We expected that with the strike, and fewer depots allowing units to IN-GATE, it would be easier to pick up units. But what we’re seeing is that it takes 4-5 hours waiting outside depots, and even then, only when windows are open. On major depots, it’s taking about three weeks just to get an appointment.”
Rob Golliher from Freedom Conex highlighted further operational challenges. “We think this will impact us over the next couple of months by slowing down deliveries and we suspect there may be more release issues at the depot due to lack of personnel. I don’t think it will be great for our customers or the industry.”
Christian Roeloffs, cofounder and CEO of Container xChange, stated, “The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules.”
Where President Biden Stands
So far, President Biden has remained on the sidelines. According to a report on xChange, President Biden has urged the United States Maritime Alliance to negotiate a fair wage with the dockworkers that reflects their essential role in the U.S. economy. He noted that ocean carriers have seen record profits since the pandemic, with some profits increasing over 800% compared to pre-pandemic levels.
“Now is not the time for ocean carriers to refuse to negotiate a fair wage for these essential workers while raking in record profits,” Biden said in a statement, emphasizing the critical role dockworkers play in supporting the nation’s recovery, especially in the aftermath of Hurricane Helene.
About the Author
You May Also Like