Why East and Gulf coast ports strike could push up consumer prices
Add Axios as your preferred source to
see more of our stories on Google.
Walmart, Ikea, Samsung, Bob's Discount Furniture, LG and Home Depot are among the biggest importers over the past year through ports that could be impacted by an impending strike of tens of thousands of workers, data from trade data aggregator Import Genius shows.
Why it matters: The strike, which could start Tuesday morning, would pose a threat to stocked shelves and consumer prices across retail, just as the industry's all-important holiday season kicks off.
Zoom in: Retailers will face added costs, such as for shipping, additional warehouse space, trucking and restocking food and other perishable inventory, Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, tells Axios.
- "It's not just about the strike itself, but it's about how long it's going to take to recover from a strike," he says.
- Typically, a one-day shutdown of an individual port could mean anywhere from three- to five- days for recovery, he adds.
- With more than a dozen ports involved, a two week shutdown could mean backup issues through the holidays and into next year, says Gold.
What they're saying: "The impact on our industry will depend on how long the strike may go on," LG Electronics USA spokesperson John Taylor said in an email to Axios.
- A Walmart spokesperson tells Axios, "We prepare for unforeseen disruptions in our supply chain and maintain additional sources of supply to ensure we have key products available for our customers when and how they want them."
- Industry trade groups NRF and Retail Industry Leaders Association both urged the Biden-Harris administration to engage with the negotiating parties.
Generally speaking, retailers with the biggest scale and best planning have about 60% of their holiday merchandise already near stores by this time every year, says Gold.
- Smaller businesses are the ones that have to worry more about supply chain issues and spiking costs.
Consumers will feel the pain too — in the form of higher prices "over the next several months," William George, director of research at trade data aggregator Import Genius, which compiled the data on company impacts, tells Axios.
- Shipping giants including Maersk, MSC Mediterranean and Hapag-Lloyd have all warned of rising freight costs in anticipation of jammed ocean routes.
- "This is going to make a lot of money for the carriers, and that price is going to get passed on to the consumer," says George.
Flashback: Supply chain shocks, including labor shortages, were the main drivers of inflation in 2021 and 2022.
- One economic study published in the spring shows that a negative one standard deviation to supply chain snarls increased prices on goods by up to 0.3% and import prices by up to 0.5%.
What we're watching: The walkout could start as soon as 12:01 am Tuesday, Oct. 1.
