The strike by the International Longshoremen’s Association (ILA) has effectively halted operations at major ports along the U.S. East and Gulf Coasts, triggering fears of supply chain disruptions and inflationary impacts. However, the U.S. Department of Agriculture (USDA) downplayed the risk of immediate food shortages, stating that current domestic agricultural production and alternative export channels can mitigate the effects of the strike, at least in the short term.
The strike, which began at 12:01 a.m. on October 1 after failed negotiations between the ILA and the United States Maritime Alliance (USMX), has frozen operations at ports from Maine to Texas. Economists and industry groups have raised concerns over the ripple effects this may have on various sectors of the U.S. economy, especially if the work stoppage drags on.
USDA: No immediate food shortages expected
In response to the strike, the USDA issued a statement today addressing concerns about its potential impact on food prices and availability. "The Administration is taking action to monitor and address potential impacts on consumers due to labor disputes at East Coast and Gulf Coast ports," the USDA said. However, the agency’s analysis suggests that the strike is unlikely to result in immediate food shortages or dramatic price spikes for most items.
“Thanks to the typically smooth movement through the ports of goods, and our strong domestic agricultural production, we do not expect shortages anytime in the near future for most items,” the USDA noted, adding that “non-containerized bulk export shipments, including grains, would be unaffected by this strike.”
The USDA also reassured meat and poultry producers who rely on East and Gulf Coast ports for exports, saying that existing storage facilities and the option to redirect shipments to alternative domestic and international markets can alleviate potential bottlenecks. “Available storage space and re-direction of products to alternative domestic and international markets can alleviate some of the pressure on farmers and food processors,” the statement read.
Economic concerns: Inflation and supply chain disruptions
Despite the USDA’s reassurances, economists remain wary of the broader economic impacts if the strike continues. Lauren Saidel-Baker, an economist at ITR Economics, said the strike could exacerbate inflationary pressures, particularly on goods. “The U.S. dockworker strike across the Gulf and East Coasts could snarl supply chains, setting up a scenario reminiscent of the pandemic-era logistics crisis,” Saidel-Baker said. “While shortages and delays are possible, the greatest economic impact will be in pricing, with greater inflationary impacts more likely the longer the strike persists.”
While some businesses may be able to rely on elevated inventories built up after the pandemic, Saidel-Baker warned that these stockpiles won’t last indefinitely. “The port strike could cause renewed goods-side inflation, although the impact would not be immediate. Many businesses still contend with elevated inventories in the aftermath of pandemic-era disruptions and bounce-back, which will likely create a cushion in the near term,” she said.
A battle over wages and profits
The strike stems from a contentious dispute between the ILA and USMX over wages and job security, with the union calling for wage increases that reflect the billion-dollar profits being generated by the shipping industry. ILA President Harold J. Daggett has been vocal in his criticism of USMX, accusing the alliance of offering an inadequate wage package that fails to compensate workers fairly.
“The Ocean Carriers represented by USMX want to enjoy rich billion-dollar profits while offering ILA Longshore Workers an unacceptable wage package that we reject,” Daggett said earlier this week. “It’s disgraceful that most of these foreign-owned shipping companies are engaged in a ‘Make and Take’ operation: They want to make their billion-dollar profits at United States ports, and off the backs of American ILA longshore workers, and take those earnings out of this country.”
USMX, for its part, claims it has made several attempts to engage in good-faith bargaining, even increasing its wage offer in recent counterproposals. The alliance also filed an Unfair Labor Practice (ULP) charge with the National Labor Relations Board, asking for immediate injunctive relief to force the ILA back to the bargaining table.
“We have a shared history of working together and are committed to bargaining,” USMX said in a statement. “Our offer would increase wages by nearly 50 percent, triple employer contributions to employee retirement plans, strengthen our health care options, and retain the current language around automation and semi-automation.”
Agriculture industry on edge
The agricultural sector, which relies heavily on East Coast and Gulf Coast ports for exports, is particularly concerned about the impact on supply chains. The National Grain and Feed Association (NGFA) and 55 other agricultural organizations have already called on the Biden administration to intervene.
“With the harvest season underway, even the slightest delay in moving American products efficiently has a disruptive and harmful effect on our supply chain and economy,” said NGFA President and CEO Mike Seyfert. “Keeping these ports open and operating at full capacity is critical to NGFA members and rural America.”
The USDA echoed this sentiment, expressing support for collective bargaining but urging both sides to reach an agreement swiftly. “Our Administration supports collective bargaining as the best way for workers and employers to come to a fair agreement, and we encourage all parties to come to the bargaining table and negotiate in good faith—fairly and quickly,” the agency stated.
Looking ahead
As the strike continues, its ultimate economic impact remains uncertain, hinging on how quickly both sides can come to an agreement. For now, businesses and consumers alike are holding their breath, hoping that the dispute can be resolved before it leads to deeper disruptions in the supply chain and renewed inflation.
The USDA has pledged to keep a close eye on developments and work with industry stakeholders to respond to any potential impacts. But until the ports are back up and running, the nation’s shipping infrastructure—and its economy—remain in limbo.
