Strike in U.S. ports and its impact on Colombia

Colombia’s traditional export weakness will be compounded in October by difficulties and additional costs due to the strike in U.S. ports on the East Coast.

For the United States, the strike could have enormous costs and importance in the November 5 election results, for Colombia, the implications could be serious.

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Consequences of the strike in U.S. ports

The strike in the U.S. ports will interrupt, at a crucial moment, the imports and exports of that country, as large volumes of trade are mobilized with a view to the Christmas season. The International Longshoremen’s Association (ILA) will launch the strike if an agreement is not reached with the employers grouped in the United States Maritime Alliance (USMX).

The strike at U.S. ports will involve some 185,000 workers at 36 ports, including the Port of New York and New Jersey; the Port of Savannah, Georgia; and the Port of Houston, Texas.

Container shipments will be particularly affected and not passenger or bulk shipments.

The workers promoting the strike at U.S. ports are demanding wage increases and better benefits. But first and foremost that efforts to automate port operations, which would affect jobs, should not be pursued.

According to FreightWaves these ports handle approximately 43% of all U.S. container imports and will be held in the weeks leading up to the presidential election which could erode union support for the Democratic ticket.

Port revenues depend on the amount of cargo, which could mean millions in losses for port operators, and moving this trade to the West Coast could mean cost overruns and delays.

One of the Biden administration’s options is to implement the Taft-Hartley Act of 1947, which restricts union rights on the grounds that they may endanger health or national security and allows for an 80-day “cooling-off” period to be imposed on workers during which they would be required to work, but because of its electoral impact, the Biden administration is reluctant to use this mechanism.

JPMorgan estimates that the strike at U.S. ports could cost the U.S. $5 billion per day and may lead to price increases. And it will be especially important for perishable goods and retailers who are starting to stock up before Christmas.

The U.S. relies heavily on imported goods for its manufacturing, so the strike will affect factories and disrupt important supply chains.

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Impacts in Colombia of the strike in U.S. ports

According to Analdex, the strike in U.S. ports will affect 61.3% of Colombia’s sales to the United States for a value of US$ 9,128 million.

Exports that will be affected are mainly flowers, crude oil, coffee without roasting or decaffeination, herbicides, refined palm oil, prepared fruits, confectionery, avocado, cement, cotton towels, bakery products, roasted coffee without decaffeination, chocolate preparations, citric acid, among others.

Some of the products, especially agricultural products, may spoil and others may be delayed and include cost overruns. Changing destination is not so fast or so easy.

According to Juliana Villegas, director of International Promotion at Araujo Ibarra, 60% of exports are agribusiness and goods; Villegas, the US products destined to Colombia most affected by the strike at US ports would be soybean cakes with about US$590 million; but also corn; unleaded gasoline; and also motor fuel blends.

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