Longshoreman on Strike: US Ports Get Shut Down || Peter Zeihan
Oct 10, 2024
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Longshoremen across the East and Gulf Coasts are striking, severely disrupting nearly two-thirds of U.S. water imports and exports. This strike highlights the critical role of ports in the global economy, sending shockwaves through Europe’s automotive sector. Union demands for better wages clash with automation concerns, impacting trade dynamics. The shift from just-in-time to just-in-case inventory models poses new challenges for manufacturing, leading to economic drawbacks and inefficiencies. The ripple effects could be felt well into the future.
The Longshoremen strike has halted nearly two-thirds of U.S. water-based trade, severely impacting economic stability and creating significant backlogs at ports.
The disruption of maritime transport threatens U.S. agricultural exports, potentially leading to a major logistical crisis for seasonal farmers and their supply chains.
Deep dives
Impacts of the Longshoremen Strike
The Longshoremen strike significantly affects the import and export capabilities of the United States, particularly along the East and Gulf Coasts. Nearly two-thirds of the country’s water-based trade is halted due to port closures from Maine to Texas, resulting in considerable backlogs that will take several weeks to clear even after the strike ends. This disruption not only impacts the immediate flow of goods but also threatens the economic stability of regions dependent on these ports, particularly during critical seasons like the approaching holidays. Industries relying on these ports, especially European manufacturers dependent on a steady supply of components, will face heightened operational challenges and potential job losses.
Challenges to the U.S. Agricultural Sector
The agricultural system in the United States is critically dependent on maritime transport for shipping goods globally, especially grains from the Midwest. With the ports shut down, agricultural exports are at risk, potentially leading to a backlog that could devastate seasonal farmers and disrupt supply chains. As the strike coincides with a lull in agricultural production, the immediate impact might be manageable, but prolonged disruptions could severely limit market access for essential commodities. If these shipments cannot resume soon, it could create a major logistical crisis and loss of revenue for U.S. farmers entering a crucial sales period.
Potential Solutions and Future Considerations
Manufacturers are left with limited options to navigate the ongoing crisis, primarily focusing on trade with Mexico, which remains largely unaffected due to its reliance on truck and rail transport. Additionally, companies may resort to stockpiling inventory, moving away from the just-in-time logistics model that has dominated manufacturing in recent decades. This shift necessitates a significant increase in storage capacity and associated costs, detracting from funds that could enhance production capabilities. As businesses adapt to these challenges, the impact on overall efficiency and economic growth may be profound, underscoring a critical transition in supply chain strategy amid ongoing disruptions.
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Back to the picket lines we go...this time with the longshoreman. Ports across the East and Gulf Coasts of the US will impacted by the strike, disrupting nearly two-thirds of the imports and exports by water.