Canada’s biggest port was slowed to a crawl when truck drivers went on strike for 28 days in March and union spokesman Gavin McGarrigle said they are now having difficulties getting trucking companies to comply with measures in the resolution.
However it’s not just the Canadian ports facing the heat. A new study from the National Association of Manufacturers (NAM) and National Retail Federation (NRF) in the US by economists at the Interindustry Forecasting Project at the University of Maryland brought under the spotlight the economic harm that could result from a labour disruption at US ports.
The west coast ports are America’s gateway for hundreds of billions of dollars of trade with Asia and beyond and are also under the influence of labor unrest and even violence.
As negotiations continue for a new contract agreement covering 13,600 dockworkers at 30 ports stretching from San Diego, Calif., to Bellingham, Wash., the study shows the U.S. economy could lose as much as $2.5 billion a day if a prolonged West Coast port shutdown occurs.
The current labor contract between the International Longshore and Warehouse Association Union (ILWU) and port operators along the U.S. West Coast is set to expire on June 30, 2014.
“A protracted dispute between the negotiating parties could lead to reduced or shuttered terminal operations for an extended period,” the study warned. “If such disruptions occur, the economic impact would be significant and widespread.”
According to the study:
A 5-day stoppage would:
- Reduce GDP $1.9 billion a day;
- Disrupt 73,000 jobs; and
- Cost the average household $81 in purchasing power.
A 10-day stoppage would:
- Reduce GDP $2.1 billion a day;
- Disrupt 169,000 jobs; and
- Cost the average household $170 in purchasing power.
A 20-day stoppage would:
- Reduce GDP $2.5 billion a day;
- Disrupt 405,000 jobs; and
- Cost the average household $366 in purchasing power.
“It is important for the parties at the table as well as others to fully understand the economic consequences of a port disruption,” said NRF President and CEO Matthew Shay.
“Any supply chain disruption, whether it’s a port slowdown or outright stoppage, would cripple international trade, stymie supply chains and hurt domestic employment and consumer spending. For retailers and their customers, a port closure would mean a delay in back-to-school and holiday shipments that could significantly drive up consumer prices.”
In a statement NAM President and CEO Jay Timmons said, “Manufacturers depend on the ability of West Coast ports to efficiently move cargo valued at 12.5 percent of U.S. GDP.”
“A shutdown would erode that figure and inflict long-term damage to our competitiveness as manufacturers and as a nation. The parties must come to an agreement before the current contract expires.”
John Haber, founder and CEO of shipping and logistics optimization provider Spend Management Experts, said the timing of the strike would be especially bad for retailers who are gearing up now for the back to school shopping season.
The last major West Coast port disruption occurred in 2002. It lasted 10 days and was estimated to cost the US economy several billion dollars. President George W. Bush ordered the two sides back to work under the Taft-Hartley Act.
That shutdown caused diversion of cargo for many shippers to the East Coast. When they discovered the Port of Savannah, a number of them made the shift permanent.
Already, Savannah and other East Coast ports are seeing an uptick in volume as shippers divert some cargo as a precautionary hedge against the possibility of a strike.