A logistical chaos looms ahead.

The 45 thousand dockworkers and workers from 36 American ports on the East Coast and Gulf of Mexico went on strike today – and the cascading repercussions will be felt worldwide if the movement prolongs.

Since 1977, there had been no joint strikes in the ports of these regions, covering docks from Maine to Texas.

The port workers went on strike starting at midnight today. They are demanding better wages and restrictions on the automation of their activities. By early afternoon, there was no tally of the number of workers who joined the strike.

Almost half of American imports go through these ports, and the industry and commerce are preparing to deal with the lack of inputs and products.

The National Association of Manufacturers estimated that the daily trade volume affected is $2.1 billion, and the overall impact on the economy could reach $5 billion per day.

According to a JP Morgan analyst, the cost should range between $3.8 billion and $4.5 billion for each day of shutdown – a loss equivalent to 6% of the daily GDP.

A shutdown of up to two weeks should have a localized impact with no major consequences beyond delays in operations, analysts say.

But if the impasse is not quickly resolved, there will be effects on inflation and economic growth. Ships will be idle waiting for clearance for loading and unloading, with cascading effects worldwide.

“It’s not just about the cost of suspension in operations, but also about the normalization period and how long it will take for things to return to normal,” said Jonathan Gold, vice president of supply chain at the National Retail Federation to USA Today.

According to Gold, each day of strike requires three to five days to catch up on delayed work.

The shutdown has already affected the arrival of pharmaceutical ingredients and medications – including the imports of Ozempic and Wegovy from Novo Nordisk. Many pharmaceutical companies rely on the East Coast ports and will have to resort to air transport partially.

The strike is led by the International Longshoremen’s Association (ILA), which rejected the counterproposals of the United States Maritime Alliance (USMX).

The ILA demanded a wage increase from $39 to $69 per hour worked, in a staggered increase of 77% over six years. They now accept a 61.5% increase. Union members also seek protections against job loss due to automation.

“They would love to see automation all over the East Coast and Gulf Coast,” said ILA President Harold Daggett. “For them, we wouldn’t have jobs.”

USMX proposed a 50% increase, as well as tripling employer contributions to pension plans and improving health plans. They also agree to discuss some limits on automation.

In 2002, a dockworkers’ strike lasted for 11 days until President George W. Bush used a legal recourse, the Taft-Hartley Act, to compel a return to work until negotiations were concluded.

Despite pressure from business associations for White House intervention, Joe Biden chose to advocate for continued talks and stated that he does not intend to invoke the Taft-Hartley Act.

Global supply chains have already been under stress due to conflicts in the Red Sea, the drought in the Panama Canal, and the collapse of the bridge at the Baltimore port. In recent days, there was also the impact of Hurricane Helene.

The domino effect could therefore intensify at a time when the economy is gearing up for end-of-year sales, business associations said.

“It seems like a perfect storm, but it’s also a great bargaining position for those who want to go on strike,” said Peter Sand, chief shipping analyst at Xeneta, in an interview with CNBC.

The Danish giant Maersk estimated that a single week of shutdown could result in four to six weeks for transportation normalization.


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