Strike at US ports could affect Christmas – Telemundo Bay Area 48

With a longshoremen’s strike threatening to shut down ports on the East and Gulf coasts starting this week, Chris Butler is growing increasingly concerned.

Butler is CEO of the National Tree Company and, like many other companies, is counting on shipments from Asia not reaching its ports before the longshoremen’s strike scheduled for Tuesday at 12:01 a.m. ET.

The company, based in New Jersey, is an importer of artificial Christmas trees and other Christmas decorations. If the strike only lasted a few days, there might be time after that to get the trees unloaded, moved into warehouses, and ready for customers this season.

But if a strike kept the ports closed in, say, November, about 150,000 trees might not arrive in time for the peak buying season, imposing costs on National Tree and other companies. At worst, these costs, multiplied across industries, could fuel inflation and put pressure on the US economy.

“It’s definitely not the ideal situation,” says Butler.

The prolonged strike could cause delays in Christmas shipments

National Tree already stores or delivers most of the roughly 2 million artificial trees it sells each year. But it would lose revenue if 150,000 were stuck on the trees.

Other companies are facing the same situation, with cargo that could be stranded at sea if 45,000 members of the International Union of Coastal Linemen follow through on their strike threat. As many as 36 ports, from Maine to Texas, through which about half of the goods entering and leaving the United States pass through, could be closed. (The West Coast dockers belong to another union and are not participating in the strike.)

A prolonged strike would force companies to pay shippers for delays and goods could arrive too late for the peak holiday shopping season. On Friday, senior Biden administration officials met with port operators and told them they needed to negotiate with the union by Tuesday, according to a White House official who spoke on condition of anonymity to discuss an ongoing meeting.

Butler says he hopes for an agreement or government intervention to end the strike. However, the US Shipping Alliance, which represents shippers and ports, and the longshoremen’s union have not met since June. And there are no talks scheduled before his contact expires late on Monday.

James McNamara, a spokesman for the International Longshoremen’s Association, said in a statement Sunday that “the ILA’s unity remains strong and growing.” He said the union would update the public on any developments by 11am on Monday.

The union is calling for a significant wage increase and a complete ban on the automation of cranes, gates and mobile containers in the loading and unloading of goods.

The Gaming Association, the nation’s leading gaming trade group, was one of about 200 organizations that asked President Joe Biden in a letter this month to work with both sides to reach a deal. The National Grain and Feed Association also urged Biden to take steps to avoid a strike, which would occur just as the harvest season begins.

Their push has put Biden and Vice President Kamala Harris, the Democratic presidential nominee, in a delicate position: Both have won the union’s support and don’t want to be seen as pushing the far-right to reach a deal. However, if a prolonged strike caused shortages of consumer goods or fueled high inflation, it could cost Harris votes in the November election.

Under the Taft-Hartley Act, Biden could seek a court order to suspend the strike for a period of 80 days. White House spokeswoman Robin Patterson said in a statement that the administration has never invoked the law and is not considering it now.

Biden and Congress intervened two years ago to block an impending freight rail strike and force workers to accept a deal amid widespread fears that a rail strike would hurt the economy.

Alex Hertel-Fernández, an associate professor of international and public affairs at Columbia University and a Labor Department official under Biden, suggested the administration would follow the playbook it used last year in talks between West Coast ports and the union directly.

Greg Ahearn, chief executive of the Toy Association, said a strike would come at a critical time for toy retailers and manufacturers: Up to 60% of annual sales take place between October and December. Although some toy companies are shipping merchandise earlier, Ahearn said a strike would make it difficult to replenish top-selling items.

A strike, he warned, could drive up toy prices “due to shortages and increased costs”.

At National Tree, Butler and his team began preparing for a strike in July. They expedited the shipments as much as they could. But one major retail customer, he said, ordered trees early. And until recently, factories in China and other countries were unable to produce the rest of National Tree’s orders.

The ships with the trees are on their way to New York, but will not arrive until Tuesday. A prolonged strike, Butler said, would force most trees into storage until the next holiday season.

A strike by dock workers would further disrupt a global supply chain already slowed by attacks on merchant shipping by Yemen’s Houthi rebels. According to Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, these attacks have effectively paralyzed the use of the Red Sea and the Suez Canal. The attacks lengthen transit times for ships that must pass around the Cape of Good Hope to reach ports on the East Coast and Gulf Coast.

A dockers’ strike, Gold said, could prove even more damaging than pandemic-induced port congestion in 2021 and 2022, when cargo was allowed to move, albeit slowly.

Eastern ports could be paralyzed. Gold noted that shippers are already announcing container surcharges to deal with potential disruptions, a trend that could add to inflation.

Many retailers may struggle to charge customers more to offset these costs. The most vulnerable, according to Gold, would be small businesses that do not import directly and do not have the financial resources to incur higher costs.

Shippers could divert some cargo to West Coast ports. But these ports could not absorb the additional load. The Port of Los Angeles, for example, handled 960,000 containers in August, about 80 percent of its capacity, according to Gene Seroka, its chief executive.

The major western railroads, Union Pacific and BNSF, have increased the capacity of their systems to handle more freight as imports increase. Eastern Railroads CSX and Norfolk Southern say they can move cars and crews to handle more freight coming into Chicago from the West. But it’s unclear how much more they can take.

In any case, according to Butler, it would be too expensive to transport trees across the country by rail.

Taylor Green, co-founder of Los Angeles landscaping company Artificial Grass Solutions, which imports artificial grass, said he bought 25 percent more than usual to ensure there would be enough for his clients’ projects. It has also made arrangements with alternative suppliers in case the strike continues indefinitely. If so, the prices will probably have to go up.

However, like some major retailers and manufacturers, Artificial Grass says it is better prepared for the shortage than it was during the pandemic.

“We’ve learned to be more proactive than reactive,” says Green.