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U.S. East Coast Port Strikes:  Implications for Shippers, Consumers, and the Economy

U.S. East Coast Port Strikes:  Implications for Shippers, Consumers, and the Economy

Professor Nick Vyas weighs in on the strike’s short-term and long-term impacts on the global supply chain.

by: Nick Vyas
10.03.24
Large container ship dock at the Port of Charleston, SC.

Failed negotiations between U.S. East Coast port workers and operators resulted in a three-day strike in October 2024. (Port of Charleston, South Carolina pictured.)
[iStock Photo]

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  • Nick Vyas

    Nick Vyas
    • Founding Director Randall R. Kendrick Global Supply Chain Institute
    • Academic Director MS Global Supply Chain Management
    • Professor of Data Sciences and Operations

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Editor’s Note: This faculty perspective was written during the three-day strike (Oct. 1–3) that took place at 36 ports along the U.S. East and Gulf Coasts. Nick Vyas is the Founding Director of the USC Marshall Randall R. Kendrick Global Supply Chain Institute and an associate professor of Clinical Data Science and Operations (DSO).

As labor unrest hits U.S. East Coast ports, the effects are already rippling through supply chains, with far-reaching consequences for shippers, consumers, and the broader economy. While labor strikes are not a new phenomenon, the timing of the October 2024 disruption comes at a critical moment as businesses head into the crucial holiday season and global trade routes remain under strain from lingering pandemic disruptions and geopolitical tensions.

Short-Term Disruption: A Supply Chain Bottleneck
In the short term, the strike is creating immediate headaches for shippers. Companies are scrambling to reroute shipments to major East Coast ports like New York, Savannah, and Charleston, which are slowing or halting operations. Some are turning to alternative ports in Canada, Mexico, or the Gulf Coast to keep goods moving. However, these options are limited, leading to rising freight costs.

For businesses that rely on just-in-time inventory systems, the situation is especially dire. Retailers, auto manufacturers, and tech companies will likely see stockouts and delays, with some forced to miss crucial delivery windows. These delays could cost millions in lost sales for those in industries with seasonal peaks, like fashion and consumer electronics.

Meanwhile, freight rates are climbing as companies look to secure increasingly scarce cargo space. Air freight, often seen as the last resort, is also spiking in price, further pressuring margins.

Consumers: Feeling the Pinch in Stores and Online
Consumers, too, will feel the impact almost immediately. As goods get stuck at port or rerouted through more expensive channels, retailers will pass the added costs on to shoppers. Prices of everyday goods — clothing, electronics, household items — are expected to rise. In addition, the shipping delays will mean longer wait times for online orders, a particularly frustrating scenario as holiday shopping ramps up.

Consumers will not only be worried about price increases; availability will also become an issue. As retailers struggle to stock shelves, stockouts, especially for high-demand items, will become more common. The timing couldn’t be worse for businesses hoping to recover from the challenges of recent years, and shoppers will need to adjust expectations on both price and delivery speed.

For the country, the focus should shift to solving the deeper issues driving labor unrest, while finding ways to maintain U.S. competitiveness in an increasingly regionalized global economy.

— Nick Vyas

Founding director of the USC Marshall Randall R. Kendrick Global Supply Chain Institute

For the Country: Economic Ripples and Policy Considerations
At the national level, the strike poses serious challenges to economic growth. It’s estimated that the U.S. economy could lose up to $1–1.5 billion daily in lost trade. Retail, automotive, and agriculture industries are already feeling the pinch, with ripple effects set to extend into the broader economy. And with inflation already a major concern, the added costs from shipping disruptions could drive prices higher across many sectors.

The stakes are particularly high for industries that depend on the smooth flow of international trade. U.S. agricultural exports, pharmaceuticals, and manufacturing equipment are essential commodities passing through East Coast ports. Delays in these shipments could hurt the U.S.’s competitiveness in global markets, particularly in Europe and Asia, where tight delivery timelines are critical.

But beyond the immediate economic loss, there is a larger, more structural question: Will the East Coast ports be able to resolve long-standing issues that have fueled the strike? One of the central points of contention is the increasing push for automation at ports. While automation promises improved efficiency and lower long-term costs, it also threatens jobs in an industry heavily reliant on unionized labor. Striking workers are pushing back, wary that automation could lead to widespread job losses.

Long-Term Impacts: Supply Chain Rethink and the Automation Debate
Companies will be forced to rethink their supply chain strategies if this strike drags on or leads to more prolonged labor unrest. Over the past few years, there has been a growing trend toward nearshoring, where businesses move production closer to home, reducing their reliance on distant, vulnerable shipping lanes. The current labor unrest may accelerate this trend, with more companies looking to diversify away from U.S. ports entirely.

Some businesses may look to develop contracts with alternative ports outside the U.S., such as those in Mexico and Canada, or even shift production to regions less affected by labor disputes. This shift may also accelerate moves toward regional trade networks, reducing dependency on globalized supply chains that run through a few key chokepoints.

At the heart of this is the ongoing debate over automation. As U.S. ports — East Coast and West Coast alike — grapple with rising costs and the need for greater efficiency, the push to modernize through automation is inevitable. Yet, this creates a fundamental tension between labor and port operators. While automation could streamline operations, improve cargo flow, and cut costs, it also threatens to displace the workers striking today. The outcome of these negotiations may set a precedent for the future of port operations in the U.S., determining whether labor-intensive jobs will survive in the face of technological advancement.

Inflationary Pressures and Geopolitical Shifts
Another long-term impact will be on inflation. Persistent supply chain disruptions, such as those caused by port strikes, increase costs. With inflation already elevated, additional pressure from higher shipping costs and delayed goods will likely push prices further. Shippers and retailers will face tough decisions about how much to absorb these costs and how much to pass on to consumers.

Geopolitically, the strikes will also accelerate the shift toward friend-shoring or regionalizing supply chains. The U.S.-China trade war, COVID-19 disruptions, and now port strikes are prompting companies to move production closer to home, whether in North America or allied regions. This shift could lead to a structural realignment of global trade, with long-term consequences for U.S. port traffic.

Flexibility and Resilience Are Keys amid Geopolitical Uncertainties, On-going Decoupling, and Macro/Micro Level Uncertainties
In the short term, the East Coast port strike is already a logistical nightmare for shippers and a cost burden for consumers. However, the long-term impacts could reshape supply chains for years to come. Companies must remain flexible, exploring alternative trade routes, investing in digital tools for supply chain visibility, and preparing for an era where labor and automation are in direct conflict.

For consumers, the lesson may be to brace for higher prices and longer wait times. For the country, the focus should shift to solving the deeper issues driving labor unrest, while finding ways to maintain U.S. competitiveness in an increasingly regionalized global economy.

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