Last month we discussed the potential of the Longshoreman striking across US ports. From today, 1st October, the Longshoreman are now officially on strike having made their vote clear. The words of a fiery Harold Daggett, the leader of the ILA stated “I will cripple you” in his comments to the US Government if an agreement wasn’t reached. The impact to the US economy and consequently the wider global supply chain of this comment is now about to be tested.
US economy – What will the longshoremen strike mean?
With 45,000 portworkers and 36 ports where half the cargo coming in and out of the US affected, some experts are saying for every day of the strike it will take between 4-6 days to recover. Amplifying this long term would result in a catastrophic effect to the US economy, almost certainly affecting Xmas and into 2025. This is the first national stoppage by this unions longshoremen since 1977 but the difference nearly 50 years later is the hugely significant reliance on a global supply chain and the stranding of billions in trade.
If we imagine just in this month of Ocober, the first situations will be things such as fuel for refineries. This could have an immediate knock on effect as panic sets in regarding fuel access and subsequently surging prices. Things such as construction parts, goods, cars, etc all unable to dock and reach markets brings manufacturing to a halt. What happens after today can be left to the imagination but fuel is absolutely a pivotal part of a possible breakdown in the country. Obviously we are not trying to scaremonger but this is certainly a very serious situation if not addressed quickly. We can’t think of a positive workaround currently without port workers.
Global effects
It goes without saying, the longer this longshoremen strike goes on, the worse it will be for businesses trading with the US. If it’s only a few days there is time to fix the disruption. If it’s say a month then Xmas orders will miss peak shopping season bringing huge cost to those affected in the form of lost revenue, warehouse costs and probable shipping line costs.
Shipping containers become storage boxes stuck at sea or having to be redirected once again bringing container congestion which could eclipse that felt during the pandemic. In a global supply chain already under distress from slowdowns caused by attacks from Houthi rebels on ships, it seems there is no end to the risk and costs associated with global trade in a volatile world.
AI & Automation
The International Longshoremen Association are striking because they want better pay, but also they want job security – assurances that Automation and AI will not replace them. This assurance has not been given and the very act of striking and its effects pushes the automation issue towards a deemed necessity in some quarters.
The Chinese port in Guangzhou has recently been in the news showing the way office based staff are unloading ships remotely with 5G and AI vehicles moving the containers around the port with no human assistance.
The technology to replace workers already exists so the Longshoremen are right to be worried about their futures. Whether striking is the solution is up for debate but the reality is, over the coming years and decades we can expect huge changes in jobs due to automation and AI.
However we feel this is a deeper discussion saved for another day. Right now let’s be hopeful the longshoremen strike can be brought to a swift conclusion we can all still have a happy Xmas.
Resources
For a more indepth analysis of the situation including potential impacts on the US election head over to this BBC article here
UPDATE: On 4th October 2024 the union representing the dockworkers agreed to suspend the strike just 3 days in. However this tentative agreement on wages only, last until only 15th January 2025. At this point all parties will return to the table to negotiate “all other outstanding issues”. We will keep you updated so stay tuned.
