Dockworkers unpack lasting weak trade links
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Gabriel Rubin
WASHINGTON, Oct 1 (Reuters Breakingviews) -Longshoremen on U.S. East and Gulf coasts are making clear that all the onshoring, nearshoring, and friendshoring will only go so far. Intricate webs of globalization that crumbled under the weight of pandemic-related lockdowns have recovered and improved significantly, partly thanks to government and corporate investments. And yet a sustained work stoppage on all-important docks stands to wreak havoc anyway.
Maritime shipping rates largely stabilized by early 2023, after surges caused by shoppers changing their habits and a dearth of steel containers. U.S. cargo deliveries were tested again in May by a deadly boat crash outside Baltimore, forcing other hubs to handle the traffic. Broader disruptions were minimal while others, including attacks in the Red Sea by Yemen-based Houthi militants, led to troubling but largely manageable impacts.
Shutting down ports in Norfolk, Houston and 12 other spots that collectively account for about half of U.S. oceanic imports – including cars, bananas and other goods – is different. Despite the heavy lifting done to secure trade routes and stockpile commodities, the country will never be autarkic. U.S. President Joe Biden has championed the idea of bringing semiconductor, renewable energy and other production home, but even domestic or nearby manufacturers rely on parts and ingredients from distant places.
Rerouting ships and switching to air transport are costly and complicated alternatives. A lengthy strike by some 45,000 dock workers would hurt the U.S. economy by as much as $5 billion a day, JPMorgan analysts estimate. And each week that goes by risks creating a monthlong backlog.
U.S. President Joe Biden has the power to avert such economic turmoil by ordering ports to stay open and forcing the two sides to try and bridge the gap on their respective 50% and 77% wage-hike offers. The union representing stevedores also opposes any significant automation at its ports, which already lag most of the world. Other major gateways, such as Singapore and Rotterdam, rely far more on robots and less on workers. U.S. West Coast dockworkers also reached a deal with port operators last year that accedes to greater automation.
Biden is highly unlike to intervene, however. Although he and Congress helped resolve a 2022 rail strike, the decision prompted blowback from labor groups. With a tight race for the White House just a month away, the president is likely to heed the union’s warning to steer clear of any meddling. The whole mess provides a useful reminder that some weak links in the supply chain will be irreparable.
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CONTEXT NEWS
U.S. East Coast and Gulf Coast dockworkers went on strike on Oct. 1, jeopardizing about half of U.S. oceanic shipping.
The International Longshoremen’s Association is at odds with port operators over wages and automation proposals.
Global supply chain pressures have abated https://reut.rs/3BqADml
Editing by Jeffrey Goldfarb and Pranav Kiran
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