On Tuesday, October 1, 2024, the International Longshoremen’s Association (ILA) voted to strike, marking the virtual closure of the busiest ports on the Eastern and Gulf Coasts.
The Longshoremen, the largest maritime workers union in North America, had tried to reach a new labor contract with the United States Maritime Alliance (USMX) before the previous contract expired on September 30, 2024. United States Maritime Alliance (USMX) reaches new labor contract.
Negotiations reached a deadlock and a strike began. The strike was the first at East Coast terminals since 1977.
How port strikes will affect businesses
The longshoremen’s strike had a significant impact on American business. Incoming cargo ships must divert to operating ports or be idle until workers return. Not only would this severely increase shipping costs, it would also delay the arrival of goods received by U.S. businesses.
The macroeconomic impact of port strikes may mirror the supply chain nightmare we experienced during the pandemic, or worse.
Here are the industries most affected:
- manufacturing: Manufacturers that rely on overseas material orders may delay their operations indefinitely unless they can establish new supplier relationships. If manufacturers can’t order the next round of materials, their facilities grind to a halt and they start losing money. That will lead to severe slowdowns in everything from electronics manufacturing to plastics and textiles, which could become the norm if union talks don’t progress.
- put up: Similar to manufacturing, material shortages will limit the industry’s development. Existing materials will be sold at a premium and will be completely unavailable to most companies. Whether construction companies pass this cost on to consumers or absorb losses, construction activity is likely to be suppressed as long as the strike continues.
- Retail and e-commerce: When manufacturing encounters challenges, retailers and e-commerce companies quickly feel the pinch. Stocking orders will become more challenging, if not impossible, depending on the industry. If they can’t get product, the industry could seriously miss revenue targets. Companies that do not purchase holiday inventory in advance will be affected earlier than their more proactive peers.
- catering services: Restaurants and food service providers may receive spoiled food before the crates are unpacked. Not only does this result in an immediate loss of revenue, it also causes their operations to be suspended pending their next shipment.
- transportation: As an industry familiar with supply chain challenges, the transportation industry will undoubtedly struggle until the strike is over. Joseph Camberato, CEO of National Business Capital, said in an interview with Fox News: “Many companies over-leveraged to respond to the pent-up demand caused by the epidemic. When demand changed, they did not cut expenses quickly enough, which has been the case in the past 12 years. -24 months has brought challenges to the industry. Supply chain disruption equals job losses.
Almost any type of product that consumers and businesses rely on can experience delays and cancellations. In a recent Fox News interview, the CEO of National Business Capital stated, “Beyond that, [the strike is] All efforts by the Federal Reserve to control inflation below 3% have been in vain. All products that end up under the Christmas tree will be overpriced. Businesses and consumers are finally starting to see the light at the end of the tunnel, which could completely turn everything around.
“If this lasts a few days, I think it’s manageable. If it takes a few weeks, businesses and consumers will feel the impact very quickly, certainly before the end of 2024,” Camberato added.
Watch the full Fox News interview with our CEO above!
What measures can companies take to respond to
If a dockworkers strike will impact your operations, we urge you to take action as soon as possible. Here are some things you should consider:
- If possible, buy in bulk from available suppliers to get bulk order discounts.
- How will you price your product/service. Will you lose money due to shipping delays, or will you pass the cost on to the consumer?
- Avoid interruptions. If you were to lose your business, how would you make up for the lost revenue?
The sooner you ask yourself these hard questions, the better your company will be able to respond accordingly.
National Business Capital is committed to supporting businesses to meet this challenge and move towards a brighter future. If you are looking to take advantage of capital options to sustain operations throughout the strike, our team of advisors are ready to assist.