Current:Home > ScamsHow a looming port workers strike may throw small businesses for a loop -OceanicInvest
How a looming port workers strike may throw small businesses for a loop
View
Date:2025-04-15 06:23:59
(Updated with additional information)
Time’s running out to avoid a strike at ports from Maine to Texas that has the potential to cost the economy $5 billion a day and upend the holidays for millions of Americans.
When the clock strikes midnight, the labor contract between 45,000 union dockworkers and the United States Maritime Alliance (USMX) expires, and the workers have vowed to walk without a new deal for higher wages and restrictions on automation. A strike at these 36 ports would be the first since 1977. More than 68% of container exports and more than 56% of container imports flow through East and Gulf Coast ports, according to the National Association of Manufacturers.
Any strike lasting more than a few days will likely trickle down to consumers, but small and medium-sized businesses and exporters, especially farmers, could feel the squeeze even sooner amid rising costs and product shortages, experts said. Small businesses power more than 40% of economic activity, according to the Small Business Administration.
The “strike poses severe consequences for the U.S. economy, particularly for small businesses,” said Javier Palomarez, president and chief executive of the United States Hispanic Business Council. “If a solution is not found soon, small businesses will be facing one of the greatest supply chain disruptions since COVID-19, and many do not currently have the resources to do so.”
Capitalize on high interest rates: Best current CD rates
After two years of elevated inflation, small- and medium-sized businesses are less able to cope with higher shipping costs and shortages this holiday season, experts said.
What’s at stake for farmers and agricultural exporters?
About 14%, by volume, of all U.S. waterborne agricultural exports would be affected, according to the American Farm Bureau Federation (AFBF). It values those exports at around $318 million per week.
Products that would feel the greatest hit, according to the AFBF, include:
- Poultry: Nearly 80% of waterborne poultry exports would be jeopardized, lowering prices for poultry producers as they lose vital market access, it said. Nearly half of East Coast containerized poultry exports pass through the Port of Savannah. The drop in poultry exports would trickle down to feed suppliers, especially those producing corn and soymeal, it said.
- Soybeans: “Cutting off this vital outlet for producers is particularly biting when soybean producers are expected to harvest a record crop,” wrote AFBF economist Daniel Munch. “Soybean producers near Norfolk, Virginia — which handles over 60% of East Coast containerized soybean exports — could feel the greatest impact.”
- Hay
- Cotton
- Red meat
- Vegetables
- Dairy products
- Edible nuts
Aside from international markets like China, Vietnam and Indonesia, 3.2 million American citizens in Puerto Rico could be affected by shortages and higher prices. More than 85% of the island's food supply comes from the mainland U.S., with 90% of those shipments passing through these ports, AFBF said.
What’s at stake for small- and medium-sized businesses?
The strike could be do or die for some small- and medium-sized businesses, experts said.
While large firms like Walmart and Costco can afford to take inventories early and store them, or absorb the cost of rerouting shipments to the West coast, smaller businesses typically can’t, they said.
As a result, “some businesses could miss out on critical holiday supplies entirely,” said Ben Johnston, chief operating officer at small business lender Kapitus. “Given the low margins of most small manufacturers, retailers and wholesalers, a strike of this nature could be the difference between turning a profit or stomaching a loss for the year.”
Key sectors like retail, manufacturing, food and agriculture, and pharmaceuticals will be hit hard by the resulting supply chain disruptions, Palomarez said.
What’s at stake for consumers?
Consumers may end up facing higher prices and shortages again, some analysts said.
“Any strike that lasts more than one week could cause goods shortages for the holidays,” said Eric Clark, portfolio manager at Accuvest Global Advisors. “We could get the kind of inflation for six months similar to or worse than peak inflation levels a year ago.”
Additionally, Americans may face furloughs and job losses as the labor market is cooling, some retail experts said. Companies, especially manufacturers, who rely on low inventories to keep costs down, could face parts shortages. If that happens, “assembly lines could shut down,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.
Small businesses struggles:Many small businesses teeter as costs stay high while sales drop
Companies that planned may have a better chance of weathering any prolonged strike, said Dave Charest, director of small business success for marketing firm Constant Contact.
“Over 40% of small businesses wait until October to start thinking about the holidays, but those who have already begun reaching out to customers and ordering inventory are in a stronger position to succeed,” Charest said.
Even so, small businesses remain worried.
Already, “the mood on Main Street worsened in August,” said Bill Dunkelberg, chief economist at the National Federation of Independent Businesses, in a release earlier this month. “Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase.”
What's at stake for dockworkers?
The International Longshoremen's Association (ILA) is looking for a 61.5% pay increase over six years, according to CNBC.
It's also concerned about automation. In June, it halted talks with USMX over an automation dispute. In a release then, the ILA said “ILA President (Harold) Daggett made it clear that the union will take a firm stance against any technology that threatens ILA jobs.”
On Monday, USMX said in a statement it had offered to hike wages by nearly 50%, triple employer contributions to employeeretirement plans, improve health care options, and keep its current language around automation and semi-automation.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
veryGood! (4)
Related
- $73.5M beach replenishment project starts in January at Jersey Shore
- 'Ran into my house screaming': Woman wins $1 million lottery prize from $10 scratch-off
- Counting the days: Families of Hamas hostages prepare to mark loved ones’ 100th day in captivity
- 'Mean Girls' cast 2024: Who plays Regina George, Cady Heron and The Plastics in new movie?
- Pregnant Kylie Kelce Shares Hilarious Question Her Daughter Asked Jason Kelce Amid Rising Fame
- Navy officer who’d been jailed in Japan over deadly crash now released from US custody, family says
- Winter storm to bring snow, winds, ice and life-threatening chill to US, forecasters warn
- A Florida hotel cancels a Muslim conference, citing security concerns after receiving protest calls
- Nevada attorney general revives 2020 fake electors case
- Austin ordered strikes from hospital where he continues to get prostate cancer care, Pentagon says
Ranking
- IRS recovers $4.7 billion in back taxes and braces for cuts with Trump and GOP in power
- A Florida hotel cancels a Muslim conference, citing security concerns after receiving protest calls
- Sushi restaurants are thriving in Ukraine, bringing jobs and a 'slice of normal life'
- Help wanted: Bills offer fans $20 an hour to shovel snow ahead of playoff game vs. Steelers
- Pressure on a veteran and senator shows what’s next for those who oppose Trump
- Sign bearing Trump’s name removed from Bronx golf course as new management takes over
- Blinken meets Chinese and Japanese diplomats, seeks stability as Taiwan voters head to the polls
- 'True Detective' Season 4: Cast, release date, how to watch new 'Night Country' episodes
Recommendation
What to know about Tuesday’s US House primaries to replace Matt Gaetz and Mike Waltz
Seal poses in rare appearance with 4 kids on 'Book of Clarence' red carpet: See the photo
A mudslide in Colombia’s west kills at least 18 people and injures dozens others
Tom Holland Addresses Zendaya Breakup Rumors
NHL in ASL returns, delivering American Sign Language analysis for Deaf community at Winter Classic
Biden says student borrowers with smaller loans could get debt forgiveness in February. Here's who qualifies.
Lawmakers may look at ditching Louisiana’s unusual ‘jungle primary’ system for a partisan one
Gucci’s new creative director plunges into menswear with slightly shimmery, subversive classics