Financial Union News, September 25th (Editor: Liu Rui) In the eastern usa and the coastal ports of the gulf coast, a potential supply chain crisis hurricane is gradually approaching.

The threat of a strike in usa ports is now inevitable.

Last week, the International Longshoremen's Association (ILA) accused the United States Maritime Alliance (USMX) of paying workers too low wages, and threatened that if the two sides cannot reach a new wage agreement before the contract expires on September 30, tens of thousands of union members of ILA will go on strike.

According to ILA, this strike will affect dozens of ports from Maine to Texas, resulting in a severe disruption of freight transportation in the usa. The Oxford Economic Research Institute stated in a report that as many as 0.045 million port workers could be involved in the strike, and the affected marine transportation volume will account for about 60% of the total marine transportation volume in the usa.

As of this Monday, based on the statements issued by ILA and USMX, it seems that both parties' negotiation intentions still appear to be contradictory, and there is still a long way to go to reach a negotiation agreement.

The United States Maritime Alliance (USMX) stated: "Although USMX has tried multiple times to contact and resume negotiations with ILA, we are still unable to schedule a meeting. We hope to negotiate and avoid a strike, but if ILA is unwilling to return to the negotiating table, time is running out."

ILA blames the current negotiation deadlock on USMX's refusal to provide workers with an acceptable wage increase.

Given the deep contradictions between the negotiating parties, industry officials now believe that a strike is inevitable. At the same time, major ocean transportation companies and port operators have started issuing warnings to customers and developing contingency plans.

Strikes may cause a huge impact on the supply chain.

Jason Miller, a supply chain management professor at Michigan State University, warned that the extent of the impact of this port strike "will actually depend on how long the potential assault lasts."

"If the strike lasts only 24 to 48 hours, then the damage in the long run will not be as severe... However, if the strike continues for a week or longer, there will be a massive impact. You can imagine that at that time, for each additional day of the strike, the time needed to calm the situation will double.

Grace Zwemmer, Deputy Economist at the University of Oxford, stated in a report: "Even a two-week strike could disrupt the supply chain until 2025."

According to Bloomberg citing experts' expectations, if this strike lasts for a week, it could potentially cost the US economy up to $7.5 billion.

The attitude of the Biden administration may further worsen the situation. Initially, experts speculated that the Biden administration might invoke the Taft-Hartley Act to limit the duration of the strike to a few days.

The Taft-Hartley Act is a federal law enacted by the US Congress in 1947 that limits the activities and powers of labor unions. Under this law, if a port strike is deemed to threaten national public health and safety, the President can request a court order for an 80-day cooling-off period, effectively suspending the strike.

However, according to US government officials revealed last week, Biden does not intend to invoke the law to prevent port strikes - the reason behind this may be to avoid offending the workers and voters.

The import of auto parts and bananas from the USA will be affected.

Regarding the impact of the port strike on the industry, Professor Miller from Michigan pointed out: "In terms of exports, the most affected commodity is plastic resin, while in terms of imports, I believe the most affected industry is the automotive industry, especially considering that auto parts are important import products for the USA."

"So far this year, just on the US East Coast, over 300,000 standard containers (TEUs) and 17,000 less than container load boxes (LCL) of auto parts and autos from original equipment manufacturers and tier-1 suppliers have been processed," according to CH Robinson data, with 50-60% of the parts' freight volume coming from Europe and India, and the rest coming from the Asia-Pacific region.

Miller pointed out that the shortage of auto parts supply may put auto manufacturers in swing states like Michigan and Georgia in a difficult situation.

Miller also raised another agricultural product that could be greatly affected by the strike - bananas. For consumers, the strike could have a significant impact on the price of bananas in the USA.

"So far this year, we have imported over 2 million tons of bananas, with 66-75% entering through ports along the East Coast and Gulf of Mexico coast."

He expects that if the strike continues for several weeks, the quantity of bananas in the American consumer market may sharply decrease compared to normal times. Considering that bananas are not easy to store and prone to decay, the shortage caused by the strike could further deteriorate.

Editor / jayden