Some 45,000 workers at eastern and Gulf ports are scheduled to go on strike next week if the International Longshoremen’s Union does not reach an agreement by September 30. Michigan State University supply chain management professor Jason Miller joins Catalyst hosts Sheena Smith and Madison Mills to discuss the impact of a prolonged strike on the U.S. supply chain and the broader economy.
Miller told Yahoo Finance: Within 24 to 48 hours, a major incident will not have a significant impact. On the other hand, if more than a week passes, there will be widespread balling, which can be considered to take exponentially longer to de-escalate with each additional day at that point. ”
Miller said he expects a strike to take place at this point, as the two sides have not held talks. He added, “My base case scenario would be that it would be over within a few days, but the Biden administration would not invoke the Taft-Hartley Act and basically create a committee form and submit a report. “It’s hard to believe that’s the end of it,” he added. There is a cooling-off period of 80 days. We expect some slowdown during that period as employees may not be working as fast, but it’s very difficult to see how this will play out. Considering the amount of disruption that would occur, consider extending the strike by two weeks. ”
He said, “From an inflation perspective, I’m not too worried about it. If you look at the CPI part right now, that’s still the biggest driver of year-over-year inflation. It’s the shelter element. And we know that it’s decreasing… But where we’re starting to see a bigger impact is in certain industry sectors. So on the export side, the most affected products so far are. Plastic resins. On the import side, the most affected sector as far as I can see is the automotive sector, given the important role that auto parts play as imports.”
“About 10% of all types of consumer spending comes from imports, and this is based on data from the San Francisco Fed, all types of imports. So it’s obviously impacted because it comes primarily from Canada. I’m not too worried about this from an inflation standpoint. I’m more concerned about it from a cascading disruption standpoint. If you think about it.”
Miller expects the strike’s most significant impact on consumers to be on auto parts and bananas. “We’ve imported more than 2 million tons of bananas so far this year, and most of that, you know, between two-thirds and 75 percent comes in through the Eastern Ports and Gulf Coast ports. That’s because it’s what we call low-value-density items. It’s something that needs to be brought closer to the final market by the most efficient means of transportation possible…if there’s a multi-week strike, that’s perishables. It can be difficult to get the quantities that people are used to just because, from an everyday consumer perspective, that’s probably what it feels like the most.
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This post was written by Naomi Buchanan.
