Dockworkers along both the East and Gulf coasts have pledged to strike unless a new contract has been agreed upon by October, with experts predicting that higher prices and empty shelves could follow this action. In fact, some experts believe that prices may rise before the end of the year, impacting goods during the critical holiday season.
The dire situation arose just as consumers were starting to experience relief from inflation. The International Longshoremen’s Association (ILA) is currently in negotiations on behalf of 45,000 dockworkers at three dozen U.S. ports from Maine to Texas that collectively handle about half of the country’s seaborne imports. They warned their members are prepared to stop work if they do not have a new contract by the Oct. 1 deadline.
The Retail Industry Leaders Association (RILA) expressed concern, stating in a statement that “retailers view this strike and its imminent disruption as a self-inflicted wound to the U.S. economy.” JPMorgan estimated that for each day the ports are shut down, it would take roughly six days to clear the backlog. Analysts have calculated that the economic impact of a strike could reach about $5 billion per day, according to a research note published earlier this month.
Even though retailers have made contingency plans to minimize its effects, “the longer a work stoppage goes on, the harder it will be to do so,” RILA said. Experts believe that disruptions in shipping and supply chains often lead to product shortages, which can drive up prices. If these strikes cause a rise in prices, it could push inflation higher, potentially delaying the Federal Reserve from cutting rates further. This delay could ultimately impact consumer costs for things like home mortgages, car loans, and credit cards.
SalSon Logistics CEO Jason Fisk told FOX Business that shoppers “should brace for a rise in prices for goods by the first quarter of 2025, or possibly even sooner.” He added that “importers are actively implementing strategies to manage these risks, yet these solutions often come with their own high expenses, inevitably impacting consumer prices.” Discretionary products, particularly luxury items and recreational goods, are expected to be most affected due to their high price elasticity.
While the strike’s full impact remains unclear, Fisk says he is expecting “significant repercussions” such as “retail stockouts and plant slowdowns, especially as we approach the busy holiday season.” Retail stockouts are an industry term for out-of-stock events, which is when a product is unavailable for purchase.
