If you have been watching the news lately, you have probably heard about a looming dock worker strike. The International Longshoreman’s Association has been in labor discussions with the United States Maritime Alliance and has been able to come up with an agreement as we approach the Oct 1 negotiation deadline. It may not seem obvious at face value, but this could have far reaching impacts on the US economy for a number of reasons. I will try and summarize some of the ways this could impact you, especially as we approach the holiday season.
A dock worker strike can have widespread and immediate effects on the economy, particularly because ports are key gateways for international trade. When dock workers stop working, the flow of goods through these ports comes to a standstill. This delays imports of essential products like food, electronics, raw materials, and manufacturing components. Industries reliant on timely shipments, such as automotive and retail, can experience production delays, leading to a shortage of products on the shelves, missed sales, and increased costs for businesses needing to find alternative shipping methods. Often time businesses rely on very specific operations timelines, so small adjustments can result in big impacts due to shutting down production as bottlenecks arise. Manufacturing companies rely heavily on high machine utilization rates to justify the significant financial investments in acquiring complex machinery.
The economic impact is not just felt by large companies but also by smaller businesses, which may lack the resources to handle significant delays. Many small businesses do not have enough cash on hand to weather the storm of intermittent delays in goods they require to resell. A prolonged strike can lead to increased shipping costs and prices, as businesses pass the added expenses to consumers. Inflationary pressures can rise as the supply of goods decreases while demand remains steady. This could translate to increased prices for everyday items like food and household products. Dock worker strikes can also negatively affect port-dependent jobs like truck drivers, warehouse workers, and those in the logistics industry, causing a ripple effect of job losses or reduced income across the economy.
On a global macroeconomic level, dock worker strikes can affect a country’s trade balance. Exporters face difficulties in shipping their goods abroad, potentially losing contracts and international business. This is especially impactful for those who rely on big ticket sales like heavy machinery. For countries heavily reliant on export-driven growth, this can slow GDP growth and reduce foreign exchange earnings. Additionally, global supply chains, already fragile from other disruptions like the COVID-19 pandemic, can be further strained, affecting international markets and contributing to global economic instability. Overall, a dock worker strike can create significant bottlenecks that hinder economic efficiency and growth.
So what can you do to prepare for a potential strike? First, I would ensure you have a strong financial plan that allows for unexpected events. I cover this in my online course so I won’t dig into all the details of establishing an emergency fund. Second, finding ways to reduce costs is key, especially if you are directly impacted by the strike. In my blog I have articles on cost saving strategies which is particularly important for food since that is one of the largest expense categories for most people. Third, think about your holiday plans. If a strike does come about, you may need to rethink gifts or travel. This may be challenging for those who place a lot of value in gift-giving.
