Supply chain experts warn consumers would immediately see shortages
of ConsumerAffairs
While Wall Street celebrated the Federal Reserves first interest rate cut in four years, importers and supply chain experts are warning of an economic catastrophe that could occur in less than two weeks.
The International Longshoremans Association (ILA), which represents dock workers at 36 East Coast and Gulf Coast ports, from New York to Houston, has threatened to strike on Oct. 1 if they do not have a new contract, and the two sides are said to be far apart.
CNBC reports the Port of New York/New Jersey has already begun preparations for a work stoppage. Port director Beth Rooney told the network that carriers have already begun to ramp down operations to prevent a pile-up of containers should a strike occur.
While the Fed cut interest rates, believing it has the upper hand over inflation, Mike Klage, vice president of NTG Supply Chain Solutions, says the threat of a strike is already having an inflationary effect.
Ocean carriers are capitalizing on unusual demand spikes on transatlantic and Asia-West Coast routes, driving rates up, Klage told ConsumerAffairs. Trucking rates from the West Coast are also increasing. This is just a glimpse of what's to come should the threat of a strike materialize and then potentially become prolonged.
Consumers would see shortages
Klage said West Coast trucking routes are already filling up with business that would traditionally come through East Coast ports. He says consumers should expect to see shortages, especially of perishable imports like fish and produce.
Consider the automotive sector. It takes only one part from one supplier running short on inventory to bring an OEM line down, Klage said. Air freight will certainly become a major alternative, especially on European lanes where alternative ocean routings are limited. However, this cannot solve every shortage, particularly if a strike extends from days into weeks.
Meanwhile, the United States Maritime Alliance, which represents the ports, is urging the White House to intervene to bring the two sides together. Alliance executives warn that a prolonged strike any an port could ripple into the economy in a negative way.
In a briefing this week, one executive said even a one-day work stoppage would be too long and would damage the economy.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-09-20 13:01:08
