Dockworkers' Strike in the USA: Economic Impact and Possible Winners

The US dockworkers have initiated a strike following failed contract negotiations between the International Longshoremen's Association (ILA), which represents 45,000 dockworkers, and the United States Maritime Alliance (USMX). The strike affects 36 ports along the East and Gulf Coasts, from Maine to Texas. Bruce Chan, a transport and logistics analyst at Stifel, commented on the impacts of the strike and its possible duration in the Morning Brief. Chan expects that the strike could last up to two weeks, depending on the Biden administration's willingness to intervene. According to Chan, a short strike resolved within days would "likely not be a major issue" and "relatively digestible" for the economy. However, a longer strike could lead to higher prices for consumer goods, shortages, and disruptions in critical supply chains. Regarding possible government intervention, Chan explained that the government has signaled its support for an organic negotiation process. However, if the strike lasts for two to three weeks and has broader economic impacts, the government could invoke the Taft-Hartley Act, which would initiate an 80-day cooling-off period. Nevertheless, there could still be work delays during this period, as the ILA might reduce shifts, preventing full utilization of capacities. As potential winners of the strike, Chan identified FedEx and UPS. “Their freight volume is essentially the only clear beneficiary in this situation,” Chan said. “It is basically the only way to move products within the country and bypass the ports.”