Companies in Central Pennsylvania and beyond are bracing for a strike that could upend supply chains across the U.S.
Workers who load and unload cargo at ports on the East and Gulf Coasts are poised to go on strike at midnight tonight, an outcome that looks increasingly likely to Peggy Stewart, international operations officer for Nexterus, a New Freedom-based logistics consulting firm.
“We’re just scrambling left and right,” Stewart said Friday as Nexterus worked with customers to ensure goods arriving at U.S. ports at the end of last week would be able to leave today.
Goods arriving over the weekend, she added, could be stuck at port.
Nexterus is advising clients to wait if they have goods they need to ship out this week or next, Stewart said.
The strike could be over in a matter of days, and it’s better to wait and see what actually happens, she said. “We don’t want to make a snap decision today for something that’s supposed to sail next week.”
What’s the strike: It would involve thousands of members of the International Longshoremen’s Association who work at ports from Boston to Houston.
The union has until the end of today to negotiate a new contract with the United States Maritime Alliance, a nonprofit that represents container carriers and port operators.
The two sides are divided over worker pay and the role of automation in cargo operations.
President Joe Biden could invoke the federal Taft-Hartley Act to stop a strike. But he has reportedly ruled out intervening at this point in the dispute.
The union said yesterday that it would begin its strike on Tuesday, according to CNBC.
What’s the impact: The strike would disrupt supply chains all across the eastern U.S. and drive up shipping costs as companies crowd alternative routes, whether on land, sea or air.
“This is a pretty significant and nearly unprecedented event,” said Brent Moritz, associate professor of supply chain management at the Penn State Smeal College of Business.
Some cargo can be rerouted to the West Coast or Canada, Moritz said. But not all.
The Wilmington, Delaware, port, for example, specializes in bananas, a perishable product that requires specialized equipment.
“You can’t just reroute the banana supply chain somewhere else,” Moritz said.
The Baltimore port, meanwhile, handles about 20% of U.S. auto imports, he said. “That’s a huge problem if you’re trying to get particularly a foreign car.”
Moritz also said construction companies that rely on imported components such as doorknobs, fasteners and window hardware could face problems.
For each day the strike lasts, it will take about a week to untangle supply chains, he said.
Have we been here before: It seems that way.
Companies have absorbed numerous supply-chain shocks and near-shocks following the Covid-19 pandemic, including a narrowly averted strike on Canadian freight railroads in August.
Companies have crafted risk management plans and diversified their suppliers over the last few years, said Amar Ramudhin, a supply chain and logistics expert who heads the PhD program in information systems engineering and management at Harrisburg University of Science and Technology.
But the East Coast port strike will be hard to work around.
“We are talking about not one or two ports,” Ramudhin said. “This is pretty much all the ports on the East Coast.”
Larger companies have freight agreements that may allow them to react quickly to the coming disruption, he said.
Small and midsized companies, on the other hand, could suffer.
“They don’t have that ability to negotiate and turn around very quickly,” Ramudhin said.
What’s the broader view: If the strike is over quickly, it is likely to have a minor impact on the U.S. economy as a whole, said Gus Faucher, chief economist for The PNC Financial Services Group, the Pittsburgh-based parent of PNC Bank.
“I just don’t see this as a game-changer,” he said.
Nonetheless, he said, the stakes are pretty high for both the workers and the port companies involved.
Ports stand to lose revenue during a strike, he said. And, he added, “The dockworkers are very concerned about automation.”
