For the first time since 1977, tens of thousands of members of the International Longshoremen’s Association (ILA) went on strike on October 1 at ports along the East and Gulf Coasts. The ILA, which represents about 45,000 workers, authorized a strike after talks with the United States Maritime Association reached an impasse over wage increases and the use of automation at the ports.

The strike has closed 14 ports stretching from Maine to Texas, including several of the busiest ports in the nation. While it remains unclear how long the strike will last, experts warn that a massive strike could have ripple effects on the economy and global supply chain.

We asked SIS professor Robert Koopman a few questions to better understand the possible implications of the dockworkers strike. Koopman is a professor in the SIS Department of Politics, Governance, and Economics, and he is the former Chief Economist and Director of the Economic Research and Statistics Division at the World Trade Organization.  

What is the significance of this strike?

In the United States, seaport activity generates about $5 trillion worth of economic activity annually and about $6 billion each workday. The United States is the world's largest importer with $3.3 trillion of imports in 2022 or about 77 percent of those imports arriving by sea. The United States is the world's third largest exporter—approximately $1.8 trillion of exports in 2022—with 70 to 80 percent of US exports by volume (measured in weight) transported through seaports. When measured by value, the share tends to be lower, closer to 30 to 40 percent because higher-value goods, such as electronics and machinery, are often shipped by air. Seaports remain the dominant mode for bulk goods, like agricultural products, chemicals, and machinery, which are heavy and more efficiently moved by sea. US agricultural producers could be very adversely impacted by the strike as many agricultural goods are perishable and could be lost.  

The strike is not affecting all US ports, just those on the East and Gulf coasts. The East and Gulf coast ports account for 68 percent of all containerized exports and more than 56 percent of containerized imports. West coast ports will not be affected. Further, oil and other bulk energy port activity, as well as cruise ships will not be affected by the strike.

But many agricultural, chemical, industrial parts and components, and final consumer goods will be affected, likely resulting in some shortages and upward pressure on prices, particularly with the US approaching its holiday sales period. Consumers can limit potential price increases by buying only what they need, therefore reducing demand as supply is reduced. If consumer demand remains strong in the face of supply shortages, this could result in prices increases somewhat similar, though likely smaller, to those observed during the COVID-19 pandemic shutdown. The extent of the supply disruption is likely to be much smaller than during the COVID-19 period.

What impact is this strike expected to have on the US economy?

The economic impact could be substantial depending on the length of the strike and the ability of importers and exporters to find alternative methods for shipping goods. Estimates from the National Association of Manufacturers suggest daily economic losses of around $1.5 billion to $2.5 billion, including both the direct costs of halted trade and the indirect costs incurred by disrupted supply chains. Those are big daily numbers, but actually fairly small compared to overall economic activity in the US, where daily GDP is $74 billion per day. Moody's Analytics estimated that a two-week port strike could lead to a 0.5 percent to 1.0 percent increase in consumer prices. Thus, a strike, particularly a prolonged strike, will reduce GDP growth and raise prices. This will be occurring following a period of robust GDP growth and slowing inflation.

How will this strike impact the flow of goods across the US and around the globe? Can consumers expect delays?

In the very short term, consumers and firms should experience little inconvenience as most firms built inventories in anticipation of the strike. In the medium term, a period of a few weeks to a month, shortages are likely to arise, and if consumer demand remains unchanged, we would see upward pressure on prices. Certain manufacturers and agricultural producers and their employees are likely to feel deeper and more significant effects on costs and wages. Consumers are likely to experience some inconvenience in shortages and rising prices.