Freight costs rise as businesses prepare for expensive US port strike
1 month ago
Freight costs rise as businesses prepare for expensive US port strike
Analysts say a stoppage from next week could cost the economy $5bn a day and raise prices for consumers.
US retailers, automakers, and other industries are grappling with soaring freight costs as they brace for a potential strike that could shutter nearly 36 ports next week. The International Longshoremen’s Association, which represents 25,000 dockworkers from Maine to Texas, has warned of a walkout set for early Tuesday unless port operators meet demands for significant wage increases and restrictions on automation.
If the strike proceeds, it will effectively shut down East Coast and Gulf Coast ports, which account for nearly half of all containerized imports, including essential goods such as food, pharmaceuticals, consumer electronics, and apparel. Analysts from JPMorgan project that such a disruption could cost the US economy up to $5 billion per day.
To mitigate the impact, major retailers have accelerated their import schedules for holiday goods and secured bookings with West Coast ocean and rail carriers. However, the nation's port infrastructure is ill-equipped to handle the complete shift of cargo volumes from the affected ports to the West Coast.
Businesses have already faced freight cost hikes of up to 20% due to the need for additional warehousing space to accommodate expanded inventories. Shipping lines, like Maersk, are also preparing to impose surcharges in the event of a strike, with fees such as $1,500 per 20-foot container, though these charges wouldn’t be implemented immediately.
Source: Financial Times