The International Longshoremen’s Association (ILR), representing about 45,000 dockworkers, initiated its first large-scale strike in 47 years — disrupting supply chains ahead of the holiday shopping season. Walkouts at 36 ports along the East Coast and the Gulf Coast, spanning from Maine to Texas, began early Tuesday morning after negotiations failed to produce a new labor contract by the midnight deadline. The ILR wants a 77% pay raise over the six years of a new contract and a ban on automation. The United States Maritime Alliance (USMX), which represents the port owners, offered 50% and promised to limit automation in line with the previous contract. The USMX defended its offer in a Tuesday afternoon statement: “Our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy running.” Perhaps the port owners were referring to the labor deals that were forced upon U.S. automakers to end last year’s strikes by their unions. Club holdings Amazon , Costco , Home Depot , and Best Buy have been preparing for the port strike for months — attempting to blunt any fallout it might have on their abilities to get goods from overseas. For now, we’re satisfied that our retailers have taken adequate precautions. “We’re not concerned about the impact a strike could have on our stocks,” said Jeff Marks, director of portfolio analysis of the CNBC Investing Club. It’s reasonable to have concerns about how port issues can lead to a ripple effect across the supply chain from the ocean carriers that bring in the goods to the retailers that sell them. More than half of the imports into the U.S. for discretionary categories like apparel and home products are most exposed, Barclays analysts said. They added that 60% to 70% of those imports arrive at East Coast and Gulf Coast ports. A long-term strike could cause real problems, but the “probability of that at this point is not high,” said Seth Basham, an analyst at Wedbush. To put things in perspective, for retail goods, the East Coast ports are less utilized than the West Coast ports, Basham said. Retailers that have already started diverting to other ports or bringing in goods earlier are in a “better position to have leverage over the shippers,” he added. “Most retailers, they kind of know the game already,” Lorraine Hutchinson, retail analyst at Bank of America Merrill Lynch, said on CNBC. “If you look at peak import shipping times, it’s August. They’re ready for holiday already. Most of their holiday receipts have come in between July, August, and early September, and are making their way to the retailers’ distribution centers and then to the stores.” Costco has been doing exactly that. “Our buyers are all over it. They’re watching it closely and we’ve taken as many preemptive measures as we could to prepare for this,” said Costco CEO Ron Vachris during the company’s latest…
Read More: How Amazon, Best Buy, Costco, Home Depot prepared for the port strike