WASHINGTON, Sept 28 — Some 45,000 union workers could walk off the job at seaports on the US East and Gulf Coasts on October 1, cutting off vital trade arteries just weeks ahead of the nation’s presidential election.

A JPMorgan analysis projected that a strike could cost the US economy US$5 billion (RM20.6 billlion) daily.

The strike could hit 36 ports that handle about one-half of US ocean imports. That could affect availability of a range of goods from bananas to clothing to cars shipped via container, while creating weeks-long backlogs at ports. It could also stoke shipping cost increases that may be passed on to voters already frustrated with housing and food inflation, according to logistics experts.

What’s the issue?

The International Longshoremen’s Association (ILA) union representing workers at ports from Maine to Texas and the United States Maritime Alliance employer group appear to have hit an impasse over pay. The current six-year contract expires at midnight on September 30.

A strike at all East Coast and Gulf of Mexico ports would be the first for the ILA since 1977.

The White House said it is not trying to help broker a deal, as it did last year during West Coast talks, and a Biden administration official has said the president would not use his federal powers to block a strike.

A widespread and lengthy strike could cause shortages and cost increases across a broad range of industries.

What do longshoremen do?

Longshoremen, also referred to as stevedores, handle cargo from incoming ships. They mostly work on container ships, but also do some work with car carriers and cruise ships.

They operate cranes that pluck containers from ships to "lashing,” securing cargo containers to prevent them from falling off during transit, and process paperwork.

Autos, machinery and parts

Ports covered by the contract handled US$37.8 billion worth of vehicle imports during the 12 months ended June 30, 2024, according to S&P Global Market Intelligence. The Port of Baltimore, Maryland, leads the nation in car shipments.

Auto parts are also a key import on the East Coast and Gulf of Mexico, with shipments from Europe more difficult to reroute than those from China, logistics experts said.

The ports also lead the US in shipments of machinery, fabricated steel and precision instruments, coming in at US$97.4 billion, US$16.2 billion and US$15.7 billion, respectively, S&P Global Market Intelligence data showed.

Agriculture and pharmaceuticals

About 14 per cent of all US waterborne agricultural exports, by volume, would be at risk from a strike. Over a one-week period, the potential value of those exports is estimated at US$318 million, according to the American Farm Bureau Federation.

Additionally, 53 per cent of US waterborne agricultural imports by volume are vulnerable to a strike, leading to a potential economic impact of over US$1.1 billion per week, the Farm Bureau said.

Three-quarters of the nation’s banana imports from countries like Guatemala and Ecuador land at ports on the East and Gulf Coasts, said Jason Miller, interim chair of Michigan State University’s department of supply chain management.

Separately, the US imports coffee and cocoa in large volumes and exports cotton.

A strike also would affect container exports of soybeans, soybean meal and other products and would have a significant impact on chilled or frozen meat and eggs, said Mike Steenhoek, executive director of the Soy Transportation Coalition.

The US$18-billion-a-year US beef and pork export market and the US$5.8 billion poultry and egg export sector relies on refrigerated containers that cannot sit idle for long.

About 45 per cent of all waterborne US pork exports and 30 per cent of beef exports were shipped via East Coast and Gulf Coast ports in the first seven months of this year, said US Meat Export Federation spokesperson Joe Schuele.

More than a quarter of all US egg and egg product exports and around 70 per cent of all poultry meat exports are shipped from ports along the East and Gulf Coasts, according to Customs data and the USA Poultry & Egg Export Council.

The affected ports also handle more than 91 per cent of containerised imports and 69 per cent of containerised exports of US pharmaceutical products, according to Everstream Analytics.

More one-third of containers departing the US with lifesaving medications leaves from the port in Norfolk, Virginia, while nearly one-third of containerised pharmaceutical imports enter the country through the port in Charleston, South Carolina.

Consumer goods, energy, military and cruises

Retailers account for roughly half of all container volumes. Many US retailers already have rushed in shipments of year-end holiday goods.

The ports that would be affected by a potential strike bring over half of the nation’s knitted and non-knitted apparel, valued at US$32.8 billion combined, as well furniture valued at US$23.4 billion, according to S&P Global Market Intelligence.

Though the Gulf Coast ports of Houston and New Orleans are major oil and gas shipment hubs, those commodities would remain largely unaffected by a strike involving more labour-intensive container cargo. The same applies to coal exports from Norfolk, Virginia, experts said.

The ILA, however, has pledged to handle military cargo and to work passenger cruise ships during a strike.

Higher costs, big delays

In broad terms, a strike would raise costs for shipping while also imposing lengthy delays.

The top five ports in the negotiating group — New York and New Jersey; Savannah, Georgia; Houston; Norfolk; and Charleston — handled more than 1.5 million 20-foot equivalent units (TEUs) valued at US$83.7 billion in August, according to John McCown, senior fellow at the Center for Maritime Strategy. About two-thirds of that cargo was inbound, while the remainder was outbound, he said.

Trade disruptions from a work stoppage would begin immediately, sending rates higher and rippling through the US economy, logistics experts warned.

Analysts at Sea-Intelligence, a Copenhagen-based shipping advisory firm, estimated that it could take anywhere from four to six days to clear the backlog from a one-day strike.

Maersk, one of the largest providers of ocean transportation and a member of the employer group, warned that a one-week shutdown could require up to six weeks of recovery time, "with significant backlogs and delays compounding with each passing day.” — Reuters