The first East Coast and Gulf Coast port strike since 1977 is in effect.
Workers hit the picket lines at 12:01 am today as the International Longshoremen’s Association (ILA) and U.S. Maritime Alliance (USMX) failed to come to an agreement prior to the six-year master contract expiring last night. In recent months, the union and the USMX have publicly clashed and butted heads over wages, benefits, and automation.
This morning, the National Retail Federation (NRF) issued a statement from President and CEO Matthew Shay calling upon the Biden Administration to step in stop the strike.
NRF urges President Biden to use any and all available authority and tools — including use of the Taft-Hartley Act — to immediately restore operations at all impacted container ports, get the parties back to the negotiating table and ensure there are no further disruptions.”
While the overall financial impact of the strikes on the U.S. toy industry is unknown, estimates on the total impact of the strike on the U.S. economy vary. According to The Conference Board, a one-week shut down could cost the economy $3.78 billion while simultaneously spiking inflation as consumers grapple with higher costs on products across the board.
“A disruption of this scale during this pivotal moment in our nation’s economic recovery will have devastating consequences for American workers, their families and local communities,” Shay adds. “After more than two years of runaway inflationary pressures and in the midst of recovery from Hurricane Helene, this strike will result in further hardship for American families. The administration must prioritize our economy — and the millions of Americans who depend on it for their livelihood and wellbeing — and intervene immediately to prevent further hardship and deeper economic consequences.”
Yesterday, the National Association of Manufacturers (NAM) also called upon President Biden to invoke the Taft-Hartley act to reopen ports as negotiations continue.
“The president can protect manufacturers and consumers by exercising his authority, and we hope he will act quickly,” said NAM President and CEO Jay Timmons.
Thus far, Biden still rejects the idea, telling reporters on Sunday, “It’s collective bargaining. I don’t believe in Taft-Hartley,” according to CNBC.
Toy Industry Concerns, Preparation, Echoes of the Past
The lead-up to this year’s Presidential election between Vice President Kamala Harris and former President Donald J. Trump is serving up echoes of a few years ago, with talk of tariffs, inflation, and rising freight costs grabbing headlines once more. According to the NRF, the 11-day strike on West Coast ports in 2022 may have cost the U.S. economy $1 billion a day while creating a six-month jam-up.
While nuanced, the port strike presents several challenges for the U.S. toy industry. Most major toymakers and their retail partners have already imported a good portion of products ordered for the holiday season — largely via West Coast ports which saw record imports this summer. Impact at retail should appear nonexistent today, but restocks of any sleeper hits could be in jeopardy as freight remains stuck on the water.
The strike threatens to severely disrupt the U.S. toy industry, which contributes $157.5 billion to the economy, by disrupting the supply chain and preventing critical holiday shipments from reaching shelves in time. The Toy Association is part of a coalition of impacted industries that continues to urge the Biden administration to immediately intervene on this issue and help the ILA and USMX come to a solution at the bargaining table as soon as possible.”
— Greg Ahearn, President & CEO of The Toy Association
New products for 2025 post-holiday resets and the spring selling season could also be delayed leading to empty shelves come January.
In the meantime, the industry’s thin margins may also be tested again if the need for air freight emerges to get restocks delivered for the holidays. In that case, shippers like FedEx, UPS, and DHL may come to the rescue at a significant cost during their busiest season.
“Who’s gonna win here in the long run?”
Last month, the ILA published a video on YouTube in which Union President Harold J. Daggett shared his thoughts on a number of topics, ending with a firm warning for the USMX and the companies it supports.
“Who’s gonna win here in the long run?” Daggett asks. “You’re better off sitting down and let’s get a contract, and let’s move on with this world. In today’s world, I’ll cripple ya. I will cripple you. You have no idea what that means. Nobody does!”
The Toy Book will continue monitoring the situation at the ports in the days ahead.